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[H.A.S.C. No. 109–30]








JULY 19, 20, 2005

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ROSCOE G. BARTLETT, Maryland, Chairman
ROB SIMMONS, Connecticut
JO ANN DAVIS, Virginia
CURT WELDON, Pennsylvania
JIM SAXTON, New Jersey
KEN CALVERT, California

GENE TAYLOR, Mississippi
DAN BOREN, Oklahoma

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Robert Lautrup, Professional Staff Member
Jean D. Reed, Professional Staff Member
John Sullivan, Professional Staff Member
William Natter, Professional Staff Member
Andrew Hunter, Professional Staff Member
Claire E. Dunne, Staff Assistant




    Tuesday, July 19, 2005, The Department of the Navy Plans and Programs for the DD(X) Next-Generation Multi-Mission Surface Combatant Ship (Part I)


    Tuesday, July 19, 2005

TUESDAY, JULY 19, 2005

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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


    Clark, Adm. Vern E., USN, Chief of Naval Operations, Department of the Navy

    Hamilton, Rear Adm. Charles S., II, USN, Program Executive Office for Ships, Naval Sea Systems Command

    Krieg, Hon. Kenneth J., Under Secretary of Defense, Acquisition, Technology and Logistics

    Young, Hon. John J., Jr., Assistant Secretary of the Navy, Research, Development and Acquisition, Department of the Navy

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Clark, Adm. Vern E.

Krieg, Hon. Kenneth J.

Young, Hon. John J., Jr., joint with Rear Adm. Charles S. Hamilton, II

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

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


House of Representatives,
Committee on Armed Services,
Projection Forces Subcommittee,
Washington, DC, Tuesday, July 19, 2005.

    The subcommittee met, pursuant to call, at 3:34 p.m., in room 2118, Rayburn House Office Building, Hon. Roscoe Bartlett (chairman of the subcommittee) presiding.
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    Mr. BARTLETT. The Projection Forces Subcommittee will come to order.

    Today, the Projection Forces Subcommittee meets to receive testimony on the Navy's DD(X) next-generation, multi-mission surface combat ship. This will be the first of two hearings designed to permit members to gain an in-depth understanding of the requirement, program and plans for development and construction of the ship.

    There are supporters and critics of the DD(X) program. The purpose of this hearing is to provide an opportunity on behalf of the Congress and the public to gather the facts from multiple perspectives about this program. It is important that we do so at this time because the program is approaching several key decision points.

    The DD(X) destroyer and the CG(X) cruiser programs were announced by the Navy in November of 2001 as part of a proposed new family of surface combatants that is also to include the smaller littoral combat ship, the LCS.

    The DD(X) destroyer, like the previously planned DD–21, is to be a multi-mission destroyer with an emphasis on the land attack mission. In addition to its capabilities for multi-mission support of littoral operations and precision and volume fires, DD(X) will also develop and prove out a number of advanced technology capabilities for potential application in other surface warships.
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    The fiscal years 2006 through 2011 Future Years Defense Plan (FYDP) reduces planned DD(X) destroyer procurement to one per year in 2007 through 2011 and accelerates procurement of the first CG(X) cruiser to 2011.

    The Navy estimates that the first and second DD(X)s would cost more than $3 billion each to procure and that subsequent DD(X)s would cost $2.2 billion to $2.6 billion each to procure. These estimates are substantially higher than last year's estimates.

    The DD(X) program is approaching two key decision points. One is a Major Defense Acquisition Program Milestone B review in which the Undersecretary of Defense for Acquisition, Technology and Logistics, (USD (AT&L)) will decide whether to authorize the award of a detail design and construction contract for production of the lead ship or ships.

    The program is also scheduled to complete a critical design review by August of 2005 that is intended to demonstrate the design maturity of the ship and its readiness to proceed to the next phase of the program.

    Coincident with this milestone decision, issues have been raised about significant growth in the cost of the DD(X) and whether or not the DD(X) is both cost-effective and affordable in the context of the Navy's operational requirements and overall ship procurement program. Implications to the Navy's shipbuilding industrial base of proposed changes in the DD(X) acquisition strategy and reduced procurement rate are also obviously of concern.

    To address these issues, today's hearing will include two panels. The first panel consists of witnesses from the Department of the Navy and the Office of the Secretary of Defense. The second panel consists of analysts who have monitored the program for several years.
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    In tomorrow's hearing, at 2 p.m., in room 2212, we will hear from members of the DD(X) industry team.

    For the first panel, we are pleased to welcome the Honorable Kenneth J. Krieg, Undersecretary of Defense for Acquisition, Technology and Logistics, in his first appearance before this committee.

    The Chief of Naval Operations (CNO), Admiral Vern Clark, in, I am sorry to say his last appearance before our committee.

    The Honorable John J. Young is here—welcome, sir—Assistant Secretary of the Navy for Research, Development and Acquisition.

    And the Program Executive Officer and fellow traveler to shipyards in Europe last year and this year in the Orient, Rear Admiral Charles S. Hamilton.

    Welcome, sir.

    Mr. Krieg, you come with a distinguished record as special assistant to the secretary of defense and director of program analysis and evaluation. Your new position as undersecretary of defense for acquisition, technology and logistics plays a key role in the development and acquisition of the advanced system capabilities required to assure the continued dominance of our soldiers, sailors, airmen and Marines in peace and in war. We congratulate you on your appointment and look forward to working with you.
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    Admiral Clark, you honor this subcommittee by your presence with us during your last week of active service. Thank you very much, sir, for coming. You have been a superb chief of naval operations, as you have led the Navy for these past five years. The welfare of the men and women of the Navy and their families has always been foremost among your many concerns. Your spirit of innovation and commitment to transformation has significantly increased the capabilities of today's fleet for naval and joint operations. Thank you for your service to your Navy and to this nation. We wish you the very best in your retirement from active service this coming Friday—two days away.

    The DD(X) is a subject of great importance to the Navy, Department of Defense and Congress, and we have many issues to cover. Considering the lateness of the hour in starting this hearing, I ask that our witnesses be very concise in their opening statements. Unless there is an objection, and I hear none, your written statements will be entered into the record in full.

    Before you begin your testimony, I yield to my good friend, the ranking member of the subcommittee, Congressman Gene Taylor from Mississippi, for any remarks he might wish to make.

    Mr. Taylor.

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    Mr. TAYLOR. Thank you, Mr. Chairman. I very much want to thank you for calling this hearing. Obviously, DD(X) is not only important to the future of our nation's Navy, it is important to south Mississippi's economy where we presume many of those ships will be made.

    Admiral Clark, I want to thank you on behalf of the people of south Mississippi and the whole nation for the great job you have done as CNO. I also want to remind you that if you retire early enough on Friday morning, that will still give you time to fly to New Orleans and go to bat for home port Pascagoula, speaking in your capacity as a retired admiral as opposed to active duty admiral, somewhat constrained by the wishes of the administration.

    But, again, Admiral, thank you for what you have done. It has been a thankless job for you for many years away from your family. We have had some things we have agreed on and some things we did not, but I do appreciate your service.

    One of the things I would hope you talk about today is, as my colleague and great friend, Mr. Bartlett, pointed out, we on this committee have seen the arsenal ship that was touted by the Marine Corps that never happened. We have seen the DDG–21, again, touted by the Navy that many people thought was extremely important. Did not happen.

    There is certainly some concern on this committee and in this Congress that the same thing could happen to the DD(X). I personally think that would be a tragedy for our nation. Although we are seeing the continuance of the DDG Program, and my personal view is that the last ships of last class are usually the best and probably the best value for the taxpayer, at some point we have to make a change.
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    Something I would ask you to comment on, given the concerns of many of my colleagues that the Navy has been inconsistent in its defense of the DD(X), and that the Navy has been inconsistent in telling the citizens why there is going to be so much cost-growth:

    Is it wise to have such a huge change from the DDG to the DD(X) as far as the hull shape, the propulsion, the weapons that it carries? Is it wise to have a dramatic change as opposed to an incremental change to the existing platform?

    Personally, I think we need the DD(X), but I would like to hear your thoughts on this, and, again, thank you for your many years of service.

    I would like to thank all of our witnesses for being here today.

    Mr. BARTLETT. Without objection, opening statements from all of the members of our subcommittee will be a part of the record.

    Secretary Krieg, you may proceed.


    Secretary KRIEG. Mr. Chairman, Congressman Taylor, members of the committee, not only is this my first opportunity to speak before this committee, but it is my first opportunity to testify as the undersecretary of defense for acquisition, technology and logistics, and so therefore I appreciate your invitation.
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    Today, I am here with my colleagues to express the department's views on DD(X), the multi-mission surface combatant program that you described so well.

    I will begin my quick remarks with the needs of the war fighter. They are our primary customer, and they need the capabilities of the DD(X), which is the Navy's next generation multi-mission surface combatant. It will provide naval surface fire support for the United States Marine Corps as well as the broadened joint and combined forces ashore.

    Further, the technologies created within this program will benefit the war fighters as we develop the CVN–21, CG(X), LHA(R), the shipbuilding programs of the future Navy.

    We have a significant opportunity to create a more integrated and networked force as we shift the bulk of this portfolio all at once. As designed, the DD(X) will have the capability and internal growth capacity to be a platform for new warfighting systems as they emerge during our department's transformational efforts.

    The DD(X) will allow the Navy and the joint force to counter projected threats in 2015 and beyond. The gun system combined with long-range attack projectiles will enable DD(X) to conduct fire support missions 24 hours a day, 7 days a week, even in adverse weather conditions and out to ranges well beyond any other naval guns.

    The DD(X) will also be highly automated, allowing a reduction in crew size to about 110. This reduced manning will result in significant savings to the department in operating costs relative to the current DDG–51s with crews that are two to three times as large.
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    As you noted, the next major milestone decision for DD(X) is Milestone B, at which time the Navy will seek my approval to enter into systems development and demonstration phase. We are planning for that review in the fall of this year after the department finalizes its acquisition strategy for the program and the Navy satisfies the Milestone B requirements.

    As you noted, though, there are clearly many challenges. I will not go through the change in the program structure, you laid that out quite well. We now only have one DD(X) per year, half as many as in the previous budgets.

    Additionally, the Navy decided that they only needed 8 to 12 ships instead of the originally planned 24. And, therefore, the current acquisition strategy, based on the higher number, is under review.

    Due to that reduction, the Navy is rightfully reassessing their acquisition strategy and has proposed a dual lead ship strategy that my office is currently evaluating, but for which I have not yet taken a briefing or made any decisions.

    In oversight, we will ensure that the DD(X) acquisition strategy complies with the statutory requirements and it does so in the most effective manner to serve the interests of the United States. In addition, we will carefully consider the industrial base implications of that decision.

    As to cost, it is clear that the DD(X) destroyer will cost more to build than the current DDG–51, because it will have superior capability in every aspect.
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    Some have proposed more of the less expensive DDG–51s instead of the DD(X). However, while it is outstanding in their current mission, DDG–51s have last generation capabilities. It is time to move forward.

    Let me assure you that we will continue to take a serious look at the cost-benefit analysis of this new destroyer. Successful management of programs over time requires keeping costs, performance and schedule in balance based upon the needs of the overall defense portfolio.

    You asked me further to address issues associated with the Cost Analysis Improvement Group (CAIG). When addressing cost questions, the CAIG is an important advisor to the Defense Acquisition Board and to me in my role as the undersecretary of defense for acquisition, technology and logistics.

    The CAIG provides a cost estimate of the life-cycle costs for major defense acquisition programs independent of the service estimate. The CAIG uses a combination of historical performance actual plans and financial performance as available in concert with a number of established estimating techniques. They independently assess risk to the program and then assign a range of economic values to that risk. Given my previous assignment in program analysis and evaluation, I am quite familiar with their work.

    Today, we have the opportunity to move to the next generation of this capability or we have the opportunity to buy more of the last-generation capability. I am concerned that we do not have the opportunity to do both. If there was ever a time in history to move forward, I believe this is that time.
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    I thank you again for allowing me to testify today regarding the Navy DD(X) Program and will be happy to answer any questions that you might have.

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

    Mr. BARTLETT. Thank you very much.

    Admiral Clark.


    Admiral CLARK. Chairman Bartlett, Congressman Taylor, Congresswoman Davis, Congressman Saxton and Langevin, Mr. Marshall, thank you for the chance to be here. I am very glad to be here and be able to discuss DD(X). I appreciate the invitation. I appreciate the fact that you all are here, that you are here investing in this discussion, and by doing so investing in the national security of the United States.

    In my view, this is a particularly important discussion, one that I am so happy to be part of. (Here I am with two and a half days to go, Mr. Chairman.) One that we need to have so that we can get this very important ship and its tremendous combat capability off of the drawing board and into the fleet.

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    Mr. Chairman, you said that there are supporters and critics, and so let me state my position up front as clearly as I know how to state it. For the record, I am unequivocally in full support of the DD(X) Program. It is time to get the next generation of capabilities to the fleet and the projected threat, both conventional and the Global War Against Terrorism, absolutely requires this kind of capability.

    My view, I am in alignment with Secretary Krieg: We stand at a crossroads. We can either build the next generation of capabilities or we can continue to build today's and, maybe I should say, several years back level of capabilities. And, unfortunately, because I know a lot about the Navy program and our budget authority, we do not have the capability to do both.

    And in my view, the failure to build this next-generation capability, and Congressman Taylor, this gets at your question right out of the blocks, the failure to build this next generation of capabilities comes at the peril to the future sons and daughters of America who are going to serve in the United States Navy.

    Secretary Krieg, Secretary Young and Admiral Hamilton are here with me today, and they will present you a solid shipbuilding and acquisition case for this ship.

    And over the course of the hearings that you are going to have today and tomorrow, you will have witnesses state both sides of this case, Mr. Chairman. Some are going to tell you that this ship is necessary and some that it is not necessary at all; some that it is the right cost, some that it is too costly; some that it is too risky, the technologies are too immature, and you will hear the other side. And perhaps the cost caps are an effective means to control costs.
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    Secretary Young and Admiral Hamilton will address the maturity of the technology, but the research & development (R&D) costs of DD(X) are critical to so many parts of our program. When we restructured in 2001, we did what Members of Congress applauded us for, that we did not have disparate technologies and R&D going on in multiple platforms, but we built it into one family to spiral out of. And as the secretary has said, it will affect a vast number of programs.

    I can tell you this: That it is my understanding that never before in history have we been this far with proof of technology and with this level of maturity at this stage of the design process.

    Now, I have testified before about the need for partnership with Congress and the shipbuilding industry, and I do not believe that cost caps alone prepare our Navy for the future. They do not foster the partnership that we must have with industry, and they do not create the kind of genuine acquisition reform that will make a difference. So my focus today is to speak about critical warfighting imperatives.

    We need DD(X) for a lot of reasons, and, Mr. Chairman, you talked about land attack and we focused on land attack, but there are numerous other reasons. We need it primarily to be able to get in the fight, to stay in the fight and win the fight when we must take on an enemy near land scenarios and when our nation calls.

    This ship is specifically designed to operate in these new and more challenging maritime battle spaces that we discuss—the contested littoral. Previous surface combatants were optimized for operations in the high seas, or as typically referred to, the blue water Navy. But DD(X) has been designed with the combat power that we need and significantly higher survivability for the kind of operational environment that this ship will have to operate in.
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    We need DD(X) for these kinds of things that it brings to the fight, persistent and long-range power projection to the fight without a permission slip, adding missile cells, not just for today's tactical tomahawks but tomorrow's hypersonic missiles and the room for growth that is present in this ship. We need it for its two incredible guns that could hit this room from 80 miles and not just once but time after time with incredible precision, the likes of which we have never seen before.

    Not only if I was lucky enough to command a ship like this again, that I could hit this room at long-range, but I could hit it with four projectiles fired from this same ship and have them land here at exactly the same time simultaneously by sequencing the shots at different elevations for a devastating strike against an enemy of this nation. A pair of these guns do not fit on any other surface combatants that I own in my fleet today.

    So let's dispense with the talk about redesigning DDG–51 to try to create DD(X) capability. It simply is a non-starter. These are big guns with a big magazine, and I spent hours talking about how many rounds this ship ought to carry so that it will make a difference in tomorrow's fight. And 600 rounds was the right number.

    We could have made this ship smaller, we could have reduced the number of rounds that this ship would carry, but if we did, it would not make the kind of difference that the Nation is investing in. And so it requires a sizable ship, and that is DD(X), and not a modified cruiser or not a modified destroyer, to fill the bill. Something the size of a DD(X) hull is what you need to carry this pair of guns and a magazine of decent size. If you want less, you are going to change the calculus of what kind of capability is coming to the fight.
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    But here it is about this big ship. By the way, there has been talk about a battleship. That is 55,000 tons. Interesting discussion that this is now too big of a ship at 14,000 tons.

    DD(X) also brings stealth to the game, and if you are an adversary to the United States, looking for a DD(X) is like looking for the proverbial needle in a maritime haystack. It looks 50 times smaller than a DDG–51. Think of it—50 times smaller than a DDG–51. Now, that has tremendous implications for the sons and daughters that are going to go against an enemy, because that enemy will see the ship with its eyeball before it can make out what it is on its radar. And who gets the advantage in that game?

    It has ten times the operating area that a DDG–51 has against bottom influenced mines. And this means that DD(X) can readily operate in the littorals, and most radar operators, as I said, will see the ship itself before their radar locks on. This changes the warfighting calculus forever, and it gives us a chance to kill enemy platforms before they can engage us, and that is the kind of capability we are going to need in the future.

    DD(X) will prevail against the anti-access systems that are being developed and deployed around the world. And in full committee, in closed hearing, I talked to you all specifically about those kind of challenges and things that the general public cannot be told about because of classification reasons.

    DD(X) also brings multi-mission capability in anti-air warfare (AAW) and anti-surface warfare (ASW) and undersea warfare, 15 times the improvement of a DDG in AAW detection capability in the near-land arena. That is 1,500 percent. Ten times the increase in track capacity, three times the improvement in protection of escorted units against swarm boats and the like and the ASW sweep is significantly more sophisticated and capable in the near-land environment than the DDG. Mine avoidance capability, special operation forces (SOF) insertion and five times the external communications ability of the DDG–51. It is not just about land attack.
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    But despite the tremendous improvement in capability, DD(X) R&D is also critical to all of these other ships that we talked about. Twenty-five percent of this R&D is applicable to CVN–21. Twenty-five percent of it is applicable to LHAR, and DD(X) R&D is also the foundation of planned modernization for our Aegis ships and for CGs.

    Delays in this ship—this is important to a number of you and our nation—would impact other ships. A one-year delay in DD(X) at this point in time is going to cost the Nation another $1.3 billion in delays to CVN–21, and it is going to cost another one- to two-year delay in that platform.

    And, finally, the anticipated cost of a DD(X) is almost the same for a DDG–51 but with an exponential increase in capability, and I know that we will talk about those numbers. But my numbers that I am using, fifth ship of the class, $2.1 billion, whereas the cost of a DDG–51 in FY 2007 dollars is up to $1.8 billion.

    And so as the CNO, Mr. Chairman, I am charged with—for 2.5 more days, I am in charge with equipping the Navy with the right force, not only for today but for the future. And it is an imperative to meet the developing threats, as I briefed you in closed hearings. And I am convinced more than ever before that DD(X) is a ship that we must deliver, that this is the kind of persistent combat capability we must have in the future.

    I am also morally bound to do all that I can do to provide for and protect the men and women in the United States Naval Service, those in the service now and those that are going to serve in the future and to provide them with the means to win in combat. And that is what DD(X) is all about, having the ability to operate in this toughest operational environment, the contested littoral.
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    So, in summary, Mr. Chairman, I want to be on the record emphatically that DD(X) is a warfighting imperative. The United States Navy needs it now and the technological door that it opens to our future.

    And as you listen to the secretaries and to Admiral Hamilton here today comprehensively address all of the facts, I expect the Congress to come to the same conclusion, that this program is in fact well conceived, that it is well planned, but most importantly of all that it provides the vital capability that the sons and daughters of America need to go to war for this nation. And I ask for your support to deliver these combat capabilities to our fleet of the future, and I thank you for the opportunity to address this most important program today.

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

    Mr. BARTLETT. Thank you very much.

    Admiral, I understand this is not just your last testimony before our subcommittee but your last testimony before the Congress?

    Admiral CLARK. That is correct, sir.

    Mr. BARTLETT. Sir, I think that you have probably reserved your best testimony for your last testimony. If I am ever in trouble, Admiral, I would sure like you standing by my side.

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    Admiral CLARK. Well, it would be a pleasure to be there, because you know that I believe in what this country stands for, and I believe that we have got to equip ourselves so we can do the nation's bidding.

    Mr. BARTLETT. Thank you very much, sir.

    Secretary Young.


    Secretary YOUNG. Mr. Chairman, Congressman Taylor and members of the committee, I am pleased to again appear before the committee. I especially appreciate the chance to add more factual information to the public dialogue on the DD(X) surface combatant. The Navy, under the highly capable leadership of Admiral Clark, has sought through modeling and analysis to establish requirements that ensure America's Navy can defeat potential future adversaries.

    Admiral Clark's comments on DD(X) requirements are those of a cost conscious war fighter supported by detailed analysis. The requirement, combined with the acquisition team's insight into technology and shipbuilding provide a base of information for all of the Navy's DD(X) decisions. No other entity has a comparable factual basis for determining what the Navy needs in the future.

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    Further, discussions that view ship design as a Lego block project and make cost the only driver will fail to deliver an appropriate Navy for our nation. The technologies planned for DD(X) cannot be adapted to DDG–51 class destroyers. As with the stealth aircraft, you cannot achieve true signature reduction without designing the vehicle from scratch with radar-reflecting geometries.

    Today's DDGs can accommodate no more than one of the armored gun systems with limited ammunition. DDG–51 has an adequate power and payload to carry the dual band radar sweep. DDG–51 cannot accommodate the integrated power propulsion system.

    Finally, engineering all of the crew reducing automation into a DDG would result in basically designing a DD(X) with many size and weight and power constraints and with dramatically less capability and at comparable cost.

    Further, taking time to redesign a DDG will result in the production gaps and shipyard layoffs the Navy is trying to avoid. This is a bad deal for the sailor and the taxpayer.

    Previous acquisition programs have grown in costs and slipped in schedule because of a failure to develop and test key systems early in the development effort. The successful DD(X) engineering development models have provided great confidence in our ability to design, integrate and build this new destroyer.

    There has been much discussion about DD(X) costs. Most of these discussions compare apples and oranges. It is essential to look at construction timelines and production rates in evaluating costs. Aegis is a mature program and DDGs have been purchased at rates of two to five per year, most recently at three per year. The current budget and Navy requirements project construction of one destroyer per year for roughly the next eight years.
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    Despite these low construction rates, the Navy and industry will still have to maintain significant production, integration and test personnel for these complex systems as well as the infrastructure to support that. Thus, the cost of destroyer construction at low procurement rates will be higher.

    Indeed, the Navy estimates that these considerations will result in the cost of DDG–51s being $1.8 billion per copy at a build rate of one per year. Future DD(X)s at a cost of $2.2 billion represent a good deal for the Nation relative to $1.8 billion DDGs with much less capability and greater crew, training and support costs.

    Recent price changes in DD(X) reflect good faith efforts by the Navy to accurately price the ships in a low-rate construction environment, deleting previous assumptions of three DD(X)s per year.

    Consistent with DOD pricing policies, the Navy has sought to accurately estimate and budget for DD(X) construction. There is no basis for taking these realistic estimates and arbitrarily inflating them as has been done in many media reports.

    Further, the Navy has previously, and will continue to, work to lower the cost of DD(X). I have taken my Goldwater-Nichols role very seriously. It is my job to question the use of taxpayer money against excessive requirements.

    In this context, the Navy has lowered the displacement from 18,000 tons on DD–21 to 14,300 tons on DD(X), reduced the gun firing rate from 12 rounds per minute to 10, devised a resupply concept that lowers the required magazine size and provides essentially infinite ammunition for software reuse in the combat system to be shared across naval platforms and evaluated lower cost satellite communication antennas, as examples. Requirements and costs have actually been continually reduced on DD(X).
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    Last, there will likely be industry comments about shipbuilding stability in this series of hearings. Again, we should look at the facts. President Bush and Secretary Rumsfeld quickly decided to fund an optional DDG in fiscal year 2002. The LPD DDG swap agreement followed. This agreement forced the discipline of budgeting three DDGs in FY 2004 and FY 2005, ships that might not have been in the budget in a tough cost-cutting environment.

    One industry partner got two DDGs per year for three years. Another industry partner got three additional LPDs, which are 50 percent more labor hours than a DDG. With the help of the Congress, we have accelerated LHA(R), in part through this committee, and filled a gap year on LPD–17. We are in a period of good stability in shipbuilding. Indeed, many of the shipyards are currently constrained in performance by inadequate skilled labor.

    The recent decisions on the Maritime Prepositioning Force-Future ships, combined with the DD(X) strategy, offer the chance for five to ten years of great stability for our industrial partners. However, DD(X) is a key component of this stability. Beyond ship construction, DD(X) will provide an open architecture combat system which will be leveraged, as the CNO noted, for CVN–21, LHA(R), LPD–17, DDG modernization and our other ship programs.

    Mr. Chairman, there is much more to say to completely address the DD(X) program, and I am grateful for the time you are devoting today. I look forward to your questions. I assure you the Navy has worked very hard to provide a realistic plan for shipbuilding and a path to required future capability for our nation. We are grateful for your past support and seek your support for moving forward on the DD(X) program.
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    Thank you very much.

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

    Mr. BARTLETT. Thank you very much for your service to your country and for your testimony.

    Admiral Hamilton.


    Admiral HAMILTON. Mr. Chairman, it is a pleasure to be back with you and Congressman Taylor and the subcommittee. In the interest of time, I will yield my oral statement to committee questions.

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

    Mr. BARTLETT. We are now ready for the question and answer period. As is my custom, I will reserve my questions till last. Hopefully, they will all have been asked, and I can just thank you for your testimony and your service to your country.
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    Let me now yield to my ranking member, Mr. Taylor.

    Mr. TAYLOR. Thank you, Mr. Chairman.

    Mr. Chairman, I wanted to share your remarks to Admiral Clark. You truly did save your best for last. I have been one of the ones saying that I felt like the Navy had not made a compelling case for the DD(X) program. You made that case today, and I want to compliment you on that, and if you can get a contract extension to see this through, I would certainly welcome that. [Laughter.]

    Same for you, Secretary Young. I am pleased to hear you come out so forcefully for the program that I think is needed.

    The question I have that has been raised is, is this a replacement for the DDG? If so, how are we going to replace approximately 50 ships with only 8 to 12?

    Second question would be, if you were to build more than 8 to 10, if you were to get back to your projected number, I think, of 24, what would that do to the cost by getting some sort of serious production going on?

    I will open it up to whoever is comfortable——

    Admiral CLARK. Let me just start with the requirements. You know, in the middle of all this, in five years, we have done some amazing things in the Navy, and one of them is Sea Swap, and the Fleet Response Plan and all of this. In the Navy we have today, we can provide twice as much combat capability on a moment's notice if the President called this afternoon. We are more ready than we have ever been, and our numbers are driven by these new concepts.
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    I have said 8 to 12 with an understanding that we have got to transition to CG(X) right away and, frankly, as soon as we possibly can, and we have discussed in closed hearing the details of what the chokepoints are and technological development on that. And that is in the record, so I do not need to go there. But the 24 is reduced partially because of that. We get at least 30 percent more utility out of our platforms with Sea Swap than we do without it.

    And in 2004, I went to Admiral Hamilton and I said, ''Look, we have learned enough from this to know that this ship should be designed from the keel up to do Sea Swap, and the ORD has those kinds of long-lasting materials for paint and all kinds of things that will allow it to stay forward longer.

    But, fundamentally, it is about a continuous evaluation of the campaign plans against potential high-end threats and what those numbers are going to look like.

    And so, Congressman Taylor, here is what I would—I am not going to be here to live up to this, but if I was going to be here, I would make you this pledge: My estimate is 8 to 12 this afternoon, but I am going to keep working that number forever. Every year that this program comes up I would tell you that I am going to be doing detailed analysis against the toughest enemy that we can figure out that we might have to face so that if the President, we are going to be ready.

    Those number changes have been driven by the increased availability that is going to be present to us as we continue to analyze the mix in the family of ships and what the whole family is going to produce in the major fight.
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    Mr. TAYLOR. Again, back to the question, Admiral, do you see this as a replacement for the DDG or is there something that works short term in conjunction with the DDG? And, again, off the top of my head, I think there are going to be about 50 to 55 DDGs built.

    Admiral CLARK. Well, 62, actually.

    Mr. TAYLOR. All right.

    Admiral CLARK. Okay. We started, by the way, with——

    Mr. TAYLOR. How do you replace 62 ships with only 8 to 12.

    Admiral CLARK. Yes. No, you cannot. And so capabilities that will exist in LCS and in CG(X) and other platforms will change the mix of capabilities over time, and so what I am saying is 8 to 12 is my estimate today. It could change, but it is not a one-for-one replacement for DDGs. The DDG capability will be replaced by capabilities that will evolve in LCSs and in the follow-on capabilities in CG(X). And DDGs will be upgraded hopefully in the mid-life upgrade program that is in the bill before you for us to commence.

    Mr. TAYLOR. Secretary Young, you have always impressed me with your number crunching abilities. My second part of the question was, what if you built more than 10 or 12? Does that do anything as far as bringing the price down? Does it stabilize it at about 2.2? Do you gain anything by doing that?
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    Secretary YOUNG. Checking with Admiral Hamilton, in 2004, and I think the chairman mentioned earlier, we suggested DD(X)s could be $1.5 billion to $1.8 billion, bought at 3 per year and working toward an inventory of 24. It is critical in that discussion, that apples and oranges discussion I talked about is how many ships do you buy after and what rate. Because of utilization of that infrastructure, they can build the ships, can test the ships, can integrate the ships. And so cost is very dependent on quantity.

    You also come down a learning curve as you build more ships, although we typically estimate that after the fifth ship learning starts to diminish to a degree and fight against inflation and other factors in time.

    So the best estimate I can table is what we tabled something more than a year ago, is at 3 a year, which is a significant quantity, and an inventory objective of 24. The ships could be $1.5 billion to $1.8 billion. We have more accurately priced the ships in light of the changes in requirements, quantities and build rates and countenance the fact that the shipyards will be building the ships with a leaner workforce and in a leaner environment.

    Mr. TAYLOR. Are you confident that the electric drive is ready to be put to sea? Are you confident that the proposed electric drive for this ship is ready to go to sea?

    Secretary YOUNG. I think we have good confidence in that system. I would like to give Admiral Hamilton a chance to talk to you about that engineering development model that tested the motor. We have confidence in the turbines. And, please, give him a minute to add some details of that.
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    Admiral HAMILTON. Mr. Taylor, it is a pleasure to be with you and the committee today. The engineering development models over the last three years have allowed us the opportunity to mitigate risk in ways that we have not ever done before in surface combatant shipbuilding.

    As you know, we have ten different engineering development models to test different parts of the development process and production system. The integrated power system has one that we have prosecuted now for three years and will continue to prosecute over the next several years in the production phase.

    We have in the engineering development model for integrated power approached our design initially with a permanent magnet motor design. That permanent magnet motor design in January of this year failed its stator installation tests, and based on some risk mitigation pass and analysis of the failure, we shifted to our fallback propulsion of the advanced induction motor, a motor which is being used on the Type 45 destroyer with the British Navy at this time and which in fact was developed as part of a full-scale development at Philadelphia in the United States Navy about five years ago.

    So we are very confident in the technology that comes from the advanced induction motor, and we are doing the risk mitigation tests with both the gas turbines and the motors in Philadelphia at this time.

    Mr. TAYLOR. Thank you, Mr. Chairman. I have no further questions.
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    Mr. BARTLETT. We traditionally recognize members of the committee by their position on the committee at gavel fall and by appearance at the committee after gavel fall.

    So, using that, Ms. Davis.

    Mrs. DAVIS. Thank you, Mr. Chairman.

    Admiral Clark, it is good to see you here today. You did so well with your testimony and so forth and so on and I was wondering maybe if you might become the associate member of our shipbuilding caucus and maybe you would be around to help us out with some of this shipbuilding situation. That is not an official question, Admiral.

    Admiral CLARK. I am happy to give you the answer that my ethics lawyer tells me that I give to calls like this, but I must tell you that at this point in time I am not interested. [Laughter.]

    Mrs. DAVIS. All right. We will call you later.

    I think the record, and I have heard the number bantered around as 24 DD(X) ships. I thought it was originally on the record for 32, but 32, 24, does not matter, as I am hearing today that it has been dropped to I think between 8 and 12. My question to you is going to be what changed and caused that reduction, but I think you have answered that by thinking that need to go to the CG(X), whatever the letters are.
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    But you made a comment and you said something to the effect, I think your words were that it would be based on the increased availability to you. Are you talking to dollars and dollars that we send you?

    Admiral CLARK. No. I am really talking about because let's say I make a deployment to the Arabian Gulf today, I am talking about eliminating one-third of the deployment that is tied up in transit, and by sea swapping we are adding at least 30 percent combat capability to the combatant commander with a smaller inventory.

    So what we are really doing is we are doing what the Fortune 100 companies are doing. We are figuring out how to extract more utility out of the investment, in this case the investment of the taxpayers of America.

    Mrs. DAVIS. If we continue with the production of the DDG–51, I think we are planning it for another two or more years, if I am not mistaken, is that really a wise strategy? And by doing that, is that really going to decrease the price of the DD(X)?

    Admiral CLARK. Well, I do not think that it will because our numbers show that the actions that occurred last year in the congressional season and the changing and the funding mechanisms that we were allowed to use that cost us then because we were told that we had to fund it all in one year as opposed to funding the first ship with R&D, that that cost us close to $300 million by delaying it again. Because all these teams that are developing this product are being paid for, and if you delay it further, you just simply add to the cost.
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    And so I defer to others with the expertise who are responsible for the cost figures. And let me just give you the view from the chief. If I was here and the sec def calls me and says, ''Vern, they want to build two more DDGs,'' I have enough DDGs. I love DDGs, they are great ships, but now we are talking about 2011 when this thing would deliver and the first DDG is going to be 20 years old.

    Now, I tried to make this argument based upon the discussion about the sons and daughters of America that are going to be facing the future fights, and the kind of technology that I am describing to you, the inability of the enemy to see this thing, it is quieter than a 688 submarine. An enemy is going to have to be sucked into our envelope to even find out who we are, and when they do they are falling into the lethal network of ships and combat capability and airplanes and submarines that we are building for the future, and that is the way we are going to defeat future enemies.

    Mrs. DAVIS. You sound pretty passionate, Admiral.

    If the chairman would indulge me, I have got one more question. One of my pet projects, as you all know, is the CVN–21 that some of you people hear me talk about around here. You stated that if we continue with the DDG–51, we delay the DD(X), it could delay my CVN–21 one or two more years. There are already complaints at the cost of the new CVN–21.

    What would delaying it that extra one or two years—this may be for Secretary Young, whoever wants to answer it—what are we looking at in additional cost if we do not do the DD(X) and we delay that CVN–21 another one or two years?
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    Secretary YOUNG. I mean, we have estimated that if we lost DD(X) all together, there is over $1 billion I think that would have to be put into CVN–21 to work that combat system, which is largely being taken directly out of DD(X). A year delay tends to have in the carrier business—and I would like to get you an answer for the record——

    Mrs. DAVIS. Thank you, if you would.

    Secretary YOUNG [continuing]. But a $300 million to $500 million kind of impacts, because the workforce there, likewise, we have to keep them busy. We have actually good work and a busy force there through fleet replacement and other things but there is work for them to do.

    If I could add one comment to the CNO's comments too, though. He noted we have an adequate supply of DDGs, and I think as this committee well knows, there are resource constraints. If we spent money to buy four additional DDGs, that is money that cannot be put into keeping DD(X) on schedule and getting it into the yards. That is an opportunity cost that we just cannot afford right now.

    Mrs. DAVIS. Thank you, Mr. Chairman.

    Mr. BARTLETT. Thank you.

    Mr. Marshall.

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    Mr. MARSHALL. Thank you, Mr. Chairman, for calling this hearing that permits us to become more familiar, to get an in-depth understanding, I think the committee notes suggest.

    Admiral Clark, I suspect this is not the last time that you will be testifying before Congress. I would imagine that you would get called back fairly regularly to give us advice. I found your advice to be just first class in the few times that I have been fortunate enough to sit here and listen to you and others testify. I really appreciate your service and the caliber of the service as well.

    I guess I would like a comparison of the capabilities of the DD(X) and the CG(X), what is this transition going to be? I note the reference to Sea Swap bringing a 30 percent benefit, and I wonder whether or not that applies if we are in a fight where we start losing ships and we do not have a whole lot of cushion if you have just got 8 to 12 instead of 24.

    And I will save my final comment for last.

    Admiral CLARK. Well, that is a question that has to be answered through the context of the campaign analyses that we do. CG(X) will benefit from Sea Swap, we will design it that way. In terms of the ships that you would lose in combat, it would not matter if you were swapping them or not, it would just be how many you had at home, but it would change your search capability if you had more to draw on. But if you did not change your maintenance concepts, which we did, to double our operational availability, then you would be right back where you were. So it is a whole package of variables, to be sure.

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    Let me just say that the campaign analysis and the issue for the United States Navy, and I mentioned in pre-testimony, very, very briefly, the access issue is one the Navy has to be able to deal with in concert with its other joint partners. But access for the Navy is really important. And in the closed hearing I talked about at some detail the nature of the anti-access possibilities in the future and the potential threats.

    The CG(X) has to be able to deal with very sophisticated ballistic missile threats. It has to be able to do a lot of other things that cruisers typically will do, but the thing that it will be dramatically separated from its predecessor will be the kinds of threats it will be able to deal with. It will allow us to deal with the anti-access challenge.

    And if we do not deal with that challenge, and I guess I would ask if you do not remember anything else that we talk about today is that for our nation to take its military forward, for us to have options to present to the President of the United States in the military arm, we have to defeat the anti-access challenge. And so it is at the top of our list.

    And if the Navy cannot, in concert with its joint partners, dominate the near-land battle space, that gets the Marines there, it gets the Army where it needs to be. This is something we have to do, which is why I testified in closed session in detail about the urgency of the investments that we have in this year's program to build the ancillary capabilities that are required to deliver CG(X). And I would like to defer and see if Secretary Krieg would like to add anything to that.

    I got a note here from my partner about the stealth qualities of the ship. One of the reasons I pressed the stealth so hard is that you cannot do anything and modernize in any existing platform to change the stealth characteristics of it. And to bring big capabilities, it requires a larger ship. That is why I said the idea of doing this in a mod DDG or that we are going to magically get this in a smaller ship, which somebody will suggest that, but I am going to tell you that we have done the engineering work. It is not going to happen.
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    You will not develop the big gun. By the way, the big gun that can hit this room from 80 miles, the real gun in the future will do it from 200 miles. When that happens it changes the dynamic on the battlefield for the land forces, because now their footprint is smaller, they do not have to drag around—two DD(X)s is equal to a battalion of artillery. It changes how much stuff you have got to have on the beach and how much we subject our forces to an enemy in the future.

    This kind of capability changes everything, but we can only do that because we are able to take a relatively large ship and it has those stealth capabilities that it looks like a Boston whaler, and they do not know how to find it and kill it. And that is why we have to have this capability. We are reaching for a lot of technology here.

    And Vern Clark's view is, as long as I was the spokesman for this Navy and talking about committing to the sons and daughters of this country to enemy fire, I do not want to be sitting on the side of this table of a future hearing ten years from now with you all asking my successors why we did not do something about this challenge when we had a chance to deliver the technology that would make a difference. So the stealth characteristics are going to change the enemy's ability to ever hit these things.

    Mr. MARSHALL. I assume that the CG(X) would have the same stealth characteristics.

    Admiral CLARK. Exactly. My intent is for us to spiral that ship out of this hull and not spend the research and development dollars, billions, to develop a new hull. And that is the guidance that I gave that guy sitting at the end of that table.
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    Mr. MARSHALL. And the principal difference between the capabilities of the two are the two guns and then the ability to——

    Admiral CLARK. The DD(X) is going to be a gun ship, and the CG(X) is going to be a missile ship that takes on the most sophisticated, challenging ballistic missile threat of the future.

    Mr. MARSHALL. So it would not be able to substitute for the capabilities of the DD(X).

    Admiral CLARK. No, sir. Some complementary capabilities but they are not substitutes.

    Secretary YOUNG. If I could make it simple, I think what I view as the requirements guidance from the CNO is on DD(X) to CG(X). We take out the guns, put more missile cells in, we take out the radar, which is highly capable, but replace it with an even more capable system because of the ballistic missile and stealthy aircraft threat that we face in the future. But that takes us straight into it.

    Mr. MARSHALL. Well, I guess I would just add one thing, and that is that my attitude about all this would be a lot better if you guys would quit beating Army. [Laughter.]

    Thank you very much.
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    Admiral CLARK. I have no commitment to make on that, sir. [Laughter.]

    Mr. BARTLETT. Mr. Saxton.

    Mr. SAXTON. Thank you, Mr. Chairman.

    Admiral Clark, let me just first thank you for your service to——

    Admiral CLARK. Thank you.

    Mr. SAXTON [continuing]. Our country. We have all benefited from the experience of having been here and served with you, and we have enjoyed watching your dedication and your passionate way of going about your job. And I just say that I have even enjoyed some of your speeches in the evening, and that is saying something for this town. Thank you for everything that you have done.

    Much has been said about DDG and DD(X), and one of the interesting points of information for me is the continuing spiral of the technologies that will be beneficial to the Navy and our country in the future. And as I think it was Mr. Taylor indicated, of the 62 DDGs that currently are in the inventory, many of them will serve for many years, decades to come. And I would just like to ask what plans we have to ensure their continued modernization and their robustness as we see the new technologies that are developed and are adapted to DDG ships?

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    Admiral CLARK. Fabulous question. When I got here five years ago, there was no mid-life upgrade program for CGs. So what happened? Baseline 1 cruisers are gone. They are going out of the inventory. And what happens is if you do not do it in time, and I have done an analysis of the average age of a frigate is not 25 or 30 years, it is 18. And the reason is the money does not get put in the mid-life program and then it runs out of usefulness. It does not pass the ''so what'' test about being able to take on the modern threat.

    And that is why in the proposal in front of you and the discussions we are having today is that this technology has to spend into DDGs. The DDG mid-life upgrade—by the way, the CG upgrade program is now recast and restructure, per the direction of Congress, and is submitted in the 2006 submit, and the beginnings of the DDG mid-life upgrade are being spelled out, and we could be happy to come and brief you in detail, but it all really has to do with what you do to Aegis and the open architecture modifications and new designs that are required for us to move to the future threats.

    Secretary Young, anything you want to add to that?

    Secretary YOUNG. Straightforward, a lot of great work is being done in the new Aegis 7–1 baseline that works toward that open architecture. DD(X) gave us a chance with a clean sheet of paper to do an open architecture that breaks the functions down into areas where you can write blocks of software for each function, pair 7–1 with the open architecture work on DD(X), and that is the heart of DDG modernization.

    It will give us an open architecture combat system where more like your home computer you can bring software to do a new function or upgrade against threats you face and keep increasingly changing the capability of that ship without having the baseline situation we have now, which is hard to support. We have got to get to decoupling the hardware and the software and the open architecture, and DD(X) is letting us take those steps along with some work that has been paved by the DDG program.
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    Mr. SAXTON. Admiral Hamilton, did you have anything to add?

    Admiral HAMILTON. Yes, sir. We have worked very hard on the CG modernization program to be responsive to Congress, Baseline 2 cruisers being first in the barrel going out through Baseline 4. The DDG modernization, or mid-life, taking very much advantage of the open architecture work that has been done by our friends in Lockheed Martin and Raytheon, both in Aegis 7 Phase 1 architecture as well as the more advanced DD(X) architecture for open architecture.

    It is our full intent, and in fact DD(X) serves as the fulcrum for the open architecture engine to go backwards into CG modernization, to go backwards into the DDG modernization program and forward fit into CVN–21 and LHA(R), as we talked about with Ms. Davis before. So we view this as a synergistic package, but DDG modernization and CG modernization for open architecture (OA) will not happen without DD(X).

    Mr. SAXTON. Let me just follow-up with a question about resources. I suspect that we are planning to resource these modernization programs going forward?

    Admiral HAMILTON. Every indication I have in the president's budget and the out-years is that the modernization programs are handsomely resourced.

    Secretary YOUNG. The key point here is that if we have further slippage and their age slips, that is when you lose a whole class like Baseline 1 cruisers, because then you get to the point do you have enough years left for this to pay, which is why it is so important to move out rapidly with the cruisers and get the DDG program started.
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    Mr. SAXTON. Let me move on to my second question, Mr. Chairman.

    In your testimony, you indicated that DD(X) is a pathway to CG(X) and that makes sense. I know that we are here today to specifically discuss DD(X); however, I would just like to ask, what are our plans for competing in the next generation of missile defense cruisers?

    Secretary YOUNG. Through support of the Congress and some great work with our acquisition team, we have used Cobra Judy, the replacement ship for ballistic missile defense data collection, as a pathway, along with our DD(X) dual band radar and combat system work, to set a stage for a competition in the combat system and radar suite on CG(X). We are already seeing creativity and ideas, as industry does what they need to do when they want to win a competition. So I think we have got a great stage set to get the best capability of the sailor on CG(X) through the radar and combat system process.

    Mr. SAXTON. And what would be the timelines be on that? Is it too early to tell in terms of the approaches that you might use in acquisition and timelines?

    Secretary YOUNG. I consistently try, as Admiral Hamilton knows, not to make any acquisition decision before its time. We want industry to keep thinking we could go about this any number of ways so they keep bringing the creativity we need to the table. I think we will have a competition. We are going to make some investments that the CNO has sponsored in setting the requirements and put money against bringing that radar technology to state that will meet the requirements, and that sets the stage for the competition we want to have, but the form of that I think we need to let time tell.
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    Mr. SAXTON. Well, let me ask it this way: On DD(X), we made the decision or the Navy made the decision to compete the shipbuilding piece but not to compete the weapons system piece. What are our plans in the future with regard to that subject?

    Secretary YOUNG. I think you find yourself on the weapons system side, I assume particularly the combat system radar, when you go and engineer this package, just as we found ourselves on Aegis, it becomes very hard to have a recompete, if you will, of a fully developed combat system.

    I cannot tell you we really have competition on the shipbuilding side right now either. People labor under the perception that you are competing in DD(X). Unless we got to significant quantities, we are allocating ships on DD(X), which is why we are struggling to find the right acquisition strategy to keep good cost control pressure on the program there.

    We will look for, if we can find, the same opportunities in the combat system, but it is very hard to start from scratch once you go through the non-recurring engineering to develop that very capable radar in the combat system.

    Mr. SAXTON. Thank you, Mr. Chairman.

    Mr. BARTLETT. Thank you very much.

    Mr. Langevin.

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    Mr. LANGEVIN. Thank you, Mr. Chairman.

    Gentlemen, thank you for your testimony today.

    Admiral Clark, especially to you, thank you for your years of service to this country. It has been a distinguished career, and this country is better off for your service, so thank you for that.

    Admiral CLARK. Thank you for your kind words.

    Mr. LANGEVIN. Admiral Clark and Secretary Young, in your testimony, you noted that numerous capabilities specific to DD(X) cannot be transferred to DDGs. I would like to ask within the constraints an open hearing could you describe the specific obstacles the Navy would face by sending DDG–51 into a littoral area?

    Admiral CLARK. In very broad terms, which is all we can do in an unclassified discussion, is just to say let me say where DDG has its strengths. In the anti-air warfare area, in blue water, DDG is going to hold its own and with upgrades it is going to be every bit is good or better than DD(X), any blue water. But in the near-land arena, the new radar technology that is being developed for DD(X) is superior. It is anti-clutter device capability is going to make it a superior platform, which is why I made the kind of comparisons about how much greater it would perform.

    In the anti-submarine world, in the near-land arena, the DD(X) will be superior. In the blue water, it will not. DDG will not only hold its own, it will do very, very well. And so commanders—you know, I could go down each classification area, each functional warfare area—commanders are going to optimize the capability—and, by the way, Congressman, I am projecting years down the road with the threats that we know we are going to have. See, I do not want to belittle DDG, it is a great ship, but it is technology that is now dated as compared to what we are going to need against advancing threats, which is what we are building this ship for.
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    So those are the kinds of things that I would point to, and I defer to other members if they want, other panel members.

    Secretary YOUNG. I would not add any more.

    Mr. LANGEVIN. Admiral? No? Okay.

    Well, next, Admiral Clark and Secretary Young, I think that all of us share some concerns about increased cost estimates of DD(X). In your opinion, what have been the driving factors in those cost increases?

    In your written testimony, Admiral Clark, you said our current procurement cost estimates for the lead DD(X) is approximately $3.3 billion and that follow-on ship costs would be lower, reaching $2.2 billion for the fifth ship.

    Let me ask how confident you are that those estimates will hold. And you mentioned that because of decreased manning needs of DD(X), the life-cycle costs of DD(X) will be less than DDG–51. So what are the factors other than personnel costs that you factor into the life-cycle costs, and how significantly would any other increased ship construction costs alter that comparison between DD(X) and DDG–51?

    Admiral CLARK. Well, it is really a great question. I thank you for asking it, because when we talk about costs, our whole discussion has been about up-front costs. And one of the reasons we built and designed and laid out the requirements inside the DD(X) profile the way we did was we wanted to do something about operational costs.
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    $4.2 billion is our estimate, and I frankly believe it is conservative, because I believe personnel costs are going to—in order to compete in the 21st century human capital marketplace with the kind of sophistication that you have to have in the battle space to win, the costs of those kind of people are going to increase even further.

    We have made tremendous investments in this platform that are going to reduce the manpower profile. So our estimate today is we are going to save $4.2 billion over a class of ten versus ten DDGs. And Admiral Hamilton, they have done extensive analysis on this. But that is where I am coming from on this.

    And the things that I describe that give us order of magnitude improvements in combat capability costs you something. And part of what we have done in the Navy is that we have given the Nation a way to pay for this by the kind of revolutionary and transformational techniques we have put in place to be able to deploy ships and save 30 percent of the inventory and all of these kinds of things.

    And so we are not doing one-for-one trades with these platforms, but, oh, by the way, I am the one that has come before this committee and talked about my concern over cost. And being able to drive down cost is an issue, but that is an issue about acquisition reform, not about the requirements for this ship, at least that is Vern Clark's view. And I am happy and have engaged with the full committee on that subject and happy to do it at any time, including following up on Mr. Marshall's offer to come back in my civilian clothes and have further discussions.

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    Admiral Hamilton.

    Admiral HAMILTON. Congressman, we have looked at the operation and support costs of DD(X) extensively, $13 million per ship over a 35-year ship life, times 10 ships, $4.5 billion in life-cycle savings. I do not think you can look just at the acquisition costs of a class and say that that up-front bumper sticker is the most important part of your calculus in what that warfighting capability costs you. You have to consider both the up-front costs as well as the life-cycle cost.

    There has been extensive automation in both our propulsion and damage control plants inside DD(X). We have taken the touch labor out of things like cargo handling, ammunition handling, the systems developed in the combat system to give automatic threat alert and response so that the operator does not have to work off Plexiglas grease boards and do things I used to have to do as a commanding officer on a DD–963.

    All of those reductions save the big Navy manpower costs and operation and support costs that will help us in our fight for human capital and our structuring of human capital to do the kinds of warfighting that we need in the 21st century.

    Secretary YOUNG. Maybe I will add a couple of high-level comments because there is a great chance of the committee devoting the time to it. A lot of concern about the costs of DD(X). We are going to continually work to bring that cost down, but DDGs today on the most recent multiyear are about $1.2 billion. A DD(X) light ship is 12,300 tons. A DDG–51 light ship that is without fuels and other materials, is 7,000 tons. So, we typically say 9,000 to 14,000, 50 percent bigger. It is actually more like 60 or 70 percent bigger.
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    And while people do not like to price ships by weight, that turns out to be a very good metric for aircraft and ships, all of our weapons systems. It is at least a good starting point for estimators like the CAIG and our own Navy independent cost estimators.

    So when we see a ship cost of a DD(X), once we get to the mature level at $2.2 billion and benchmark that against DDGs, which is a good practice and factor in that I have a $200 million investment in two large caliber guns instead of a $20 million investment in one medium caliber gun, I am spending roughly $200 million on the antennas on DD(X) to preserve the signature of that ship. Whereas I put standard antennas on a DDG today are more like $30 million.

    And we can provide you more lists that will help us explain to you why the DD(X) cost is higher on a good benchmarking basis against a mature DDG program, and I can get you those numbers and then tell you we are being very honest with ourselves about the labor hours. We have allotted roughly twice as much labor to the construction of a DD(X) because the finish on that ship's surface to preserve that signature again is going to have to be a higher quality than we expect on a DDG.

    And we are building in that low-rate environment I talked to you about, so the people that might otherwise be testing and evaluating the complex systems of the DDG today at three per year are going to find themselves doing it one a year. We have to be careful and manage that human capital better, as the CNO said, and get this cost down, but the cost estimates are not extremely out of line when we look at the capability and the low-rate factors that are largely the factors that have put the costs higher today.

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    Mr. LANGEVIN. Okay. I think you have answered my question in terms of the cost comparison between DD(X) and DDG–51, but just to make sure that I have given you the opportunity before you answer the other part of my question, can you talk more specifically about the driving factors of the cost increases just for DD(X)?

    Secretary YOUNG. The cost increases, as a starting point, we are trying to be—well, I will go back with the 2004 ORD, which I think the committee is very familiar with, was an update to our requirements document but it also marched from an assumption of 24 ships, which is more ships and more learning curve, and buying those ships at 3 per year. And our previous FYDPs had ship quantities at that higher level. That build process brings the cost down more like to a $1.5 billion, $1.8 billion compared again to that $1.2 billion DDG.

    When we found ourselves with one ship a year to build, we very honestly went in and repriced those ships to reflect how the infrastructure costs were added, the material costs because I think certainly many people here are familiar with the price of steel has gone up by something like 100 percent, given the worldwide demand, largely driven by Asian demand. And we have tried to be honest about inflation factors.

    We are working in a business that is software intense, specialty materials intense and then labor skills intense, because there is a lot more skill, I think I can fairly say, in building a ship than there is in building some cars and other things that are built very well in America. When you factor those in and have realistic assumptions about inflation and accept that it is a five-year timeline to build a ship, we have priced that as accurately as we know how, sir.

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    Mr. LANGEVIN. Thank you, gentlemen.

    Mr. Chairman, I have one more question, but if my time has run out, I will submit it for the record.

    Mr. BARTLETT. Thank you very much.

    You heard the bells go off, they have been debating for hours and they have been rolling votes, so we have a series of votes.

    In the interest of time, I am going to ask just one question. I am going to ask the staff to give each of you a clean piece of paper and I want you to put one number on the paper. And I am not going to permit you to do what I can do. If there is a bill comes to the floor and I do not like the bill, I can vote ''present.'' I am not going to give you that option.

    What I want you to put on this clean sheet of paper is, and we are not going to get any handwriting expert to figure out who wrote what number down, at what cost does DD(X) become unaffordable? If you would just write that number on a piece of paper and fold it over and the staff will pick it up. Can you do that for me?

    Mr. MARSHALL. Mr. Chairman, I assume that they cannot look at one another's papers? This is back to grammar school where there is no cheating; is that correct?

    Mr. BARTLETT. As he suggests, no cheating by looking at each other's paper, Okay?
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    Secretary YOUNG. As I keep trying to distinguish, it is critical to talk about the cost of a lead ship and the recurring ship. So you ought to——

    Mr. BARTLETT. Put the cost down for the lead ship and the——

    Secretary YOUNG. The lead ship or the fifth ship?

    Mr. BARTLETT. Yes, lead ship and the follow-on ships.

    I want to thank the members of our second panel for being here. The staff has asked each of them if they can come back tomorrow. I think it is very important that you have been here to hear this testimony. We are looking forward to your testimony. She nodded her head in affirmation, so I gather all of you have indicated you can come back tomorrow.

    It is very late, we have had a very good session. We have a long series of votes, and we do not want to impose so much on your evening time. So with your permission, we thank you for being here, and we will have you convene tomorrow.

    I want to thank the members of this panel. I have some questions that I will submit for the record because we have this series of votes, as you heard the bell.

    Mr. Taylor has a brief question before we adjourn.

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    Mr. TAYLOR. Admiral Clark, two things. I have noticed that in trying to keep the costs of the ship down, you have reduced the crew size. First question that comes to mind is, are you convinced, walking away from this job on Friday, that the crew size that you have called for is enough to provide adequate damage control, not necessarily just to save the ship but to save the lives of the sailors on that ship?

    Admiral CLARK. Yes, sir, I absolutely am, and I also would tell you that I have done some things called optimum manning studies and analyses and we have done this with real ships. I am convinced that with better training and application of technology, we can even spiral this technology into our existing structure and do a lot better.

    Mr. TAYLOR. Second question, again, you have reduced the crew size trying to save money, you have gone to materials that last longer, require less maintenance——

    Admiral CLARK. Right.

    Mr. TAYLOR [continuing]. But I have heard no talk of has there been any effort to improve the fuel efficiency? I realize that this platform is twice as heavy and therefore that is certainly a factor, but we have the world's greatest military, I think we also have the most fuel-dependent military, and that in turn becomes a vulnerability at some point. What, if anything——

    Admiral CLARK. It has been a consideration. Admiral Hamilton can give you the specifics. We believe it to be a more efficient ship.
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    Admiral HAMILTON. Based on the hull lines and the propulsion plant and the way you can operate at fairly high rates of speed with the propulsion plant, we expect the fuel efficiency on DD(X) to be less than DDG–51 by a significant factor.

    Secretary YOUNG. Actually, I would like to add to that.

    Mr. TAYLOR. Please, sir.

    Secretary YOUNG. We had an approach on the DD(X) propulsion plant and to the credit of Charlie Hamilton and Admiral-Select Goddard, the team went in and looked at alternatives and we picked, I forget what generation, but essentially a next-generation turbine to drive that ship. Other traditional providers of gas turbines to the Navy see that and they are working, and we are setting the stage for a competition for the turbine power plant of that ship, but we have the state-of-the-art technology, the same thing used in the aircraft industry and we are driven by efficiency in how we pick that power plant.

    Mr. TAYLOR. In going to the electric drive, in the simplest of terms, going back to my high school physical science class, which said that any time you go from one form of energy, for example, from diesel to diesel electric, you automatically have lost ten percent fuel efficiency. Is that the case with this vessel in going from, say, a turbine to a transmission, to a shaft; from a turbine to an electrical drive to a shaft?

    Admiral HAMILTON. Congressman, one of the things that drives fuel efficiency in DDGs right now is as you cycle the power up and down from speed, you are cycling your gas turbine engines up and consuming fuel at a specific rate and then consuming at a lower rate but at a less efficient rate. In the integrated power system on DD(X), you are maintaining your propulsion plant at the same rate, you are not cycling it up and down. That, by definition, gives you better fuel efficiency.
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    Secretary YOUNG. Actually, I think what we want to be sure and leave you with is the plant was changed to be two large turbines and two small turbines. Only at peak loads and peak speeds do we run the two main turbines. That ship can operate in much of its operational life, support its systems and crews at the lower speed using the two small turbines. I mean, this ship is dramatically more efficient than a DDG today.

    Mr. TAYLOR. Again, thank you, gentlemen.

    Mr. MARSHALL. Mr. Chairman, thank you for indulging me. I think everybody here is intrigued by your little quiz to your panelists, and if it is possible, perhaps we could have the results of the quiz before we close today so that everybody here can hear what these gentlemen have said is their estimate of the initial costs and ongoing costs. Maybe somebody can gather these things and shuffle them up so we do not know who said what and tell us all what the result is.

    Mr. BARTLETT. If we cannot get them before the vote, we will certainly have them tomorrow.

    I want to thank you gentlemen very much for your testimony.

    Mr. Secretary, welcome aboard.

    Admiral, thank you so much for your service to your country. Fair winds and following seas.
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    Admiral CLARK. Thank you, Mr. Chairman.

    Mr. BARTLETT. Thank you very much.

    And our meeting is adjourned.

    [Whereupon, at 4:56 p.m., the subcommittee was adjourned.]