Hearing of the Senate Committee on Armed Services - Department of Defense Nominations

Statement

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I wanted to just follow through and ask Mr. Stackley a couple of questions along the lines of the things that we've been working on, having to do with the Navy and our shared concern about low rates of production that have been experienced lately and how that relates also to an industrial base that will suffer if we don't resolve these issues. So I wonder if you might address that for us.

MR. STACKLEY: Thank you, Senator Martinez, and thank you for the kind words.

Let me start in addressing the important question by going back to the Navy shipbuilding plan itself. If you look back a couple of years ago, the Navy shipbuilding plan, in fact, was changing annually. So each year, a near 30-year shipbuilding plan would emerge, which would have a different forecast for the numbers and types of ships to support the Navy's requirements as well as the industrial base.

When Admiral Mullen took over as chief of Naval Operations, he recognized that this churn in planning for shipbuilding was harming both the Navy's ability to meet its requirements as well as the industrial base's ability to facilitize (sic), to equip their workforce to efficiently meet the Navy's requirements. So he chartered a group that took a look at the long-term requirements and put in plan -- in the plan -- the Navy's commitment to stabilize that plan. And I think folks -- the committee is well aware of what is referred to as the 313-ship Navy. Incorporated in this plan was -- and is an attempt to, one, provide stability, and two, to procure the ships at a rate that balances the Navy's requirements, the Navy's resources and the industrial base's needs to be able to stabilize around that, if you will.

It continues to be a challenge. The rates at which we've been procuring ships over the past 10 to 15 years has been about six, seven, eight per year. Taking a metric, where you take the number of ships per year that you procure versus the number of shipyards that you have, it's been just about one ship per year per shipyard. The future plan looks at increasing that rate to get up to a 313-ship Navy as well as to improve upon the base for the shipyards. The challenge remains to accomplish that affordably within the resources that are available to the Navy.

SEN. MARTINEZ: So do you think that we have a realistic plan that can get us to the 313-ship Navy? I mean, is that -- do we have a realistic approach to getting that done?

MR. STACKLEY: Let me answer that question in terms of historical and then future projections. Historically, over the last 10 to 15 years, the Navy's investment in shipbuilding has averaged 10 (billion dollars) to $12 billion per year. When you look out to the end of the FYDP and beyond, the investment that's required to meet the 313-ship plan is on the order of 18 (billion dollars) to $20 billion per year. So right there, you have a 50 percent increase in the investment required to meet the plan. That challenge is significant. That investment is going to be required at the same time that other bills are coming to the department.

Would I call it realistic?

I think it requires significant effort between now and the end of the FYDP, to retire the risk associated with both cost projections and the inherent challenges associated with ship construction.

SEN. MARTINEZ: Lastly let me ask you, in the area of concerns that we share, the DDG-1000 and its future, what do we need to do to get that program back on track, as well as the LCS program?

MR. FORD: Let me start with the DDG-1000. The DDG-1000 program represents a significant investment, in research and development, in establishing requirements for the capability that the ship brings to the fleet.

Up to this point in time, the Navy has done a credible job, a thorough job of establishing the requirements, identifying the risks and putting together a development plan to retire those risks, through a series of engineering development models for the top 10 technology risks for the program.

The two lead ships were awarded -- authorized and appropriated in the 2007 budget -- were awarded design and construction contracts earlier this year. By all measures, they are currently on track, at this very nascent stage of design and construction.

But there appears to be a robust plan in place to manage the risk. But the fact remains that the capabilities that are brought to that platform are in fact leading-edge. And the investment in those 10 engineering and development models still has, in front of it, the integration of those technologies on the platform.

I believe that at this stage, proper planning has gone into the lead ships. We are at the front end of execution; need to maintain discipline in managing the risk to the program, discipline in managing design and requirements, so we don't introduce disruption.

And we need to provide the oversight required, not just in the shipyard but in the systems development arena, to ensure that the risk management plan holds true to its intentions.

The Littoral Combat Ship program is at a similar stage but arrived here at a much different path. As opposed to the DDG-1000 program, which had a lengthy development period, the Littoral Combat Ship program placed an emphasis on accelerating design and construction to deliver a capability that is needed in the fleet today.

So risk was assumed in the design and construction phase. Risk was not retired through the development phase. And as a result, you had a lot of parallel development, design, construction taking place, and as soon as disruption was introduced into the program, through design change, snowballing effect took place and costs grew significantly.

Today the first two lead ships -- one is getting ready for trials; a second ship in the water, six to nine months behind the first ship. At this stage, we have to push these ships through a completion of their test and trials. We have to clean up the design on those ships to enable a more orderly construction process for follow ships.

There's much left to be learned on the programs. The third, fourth and fifth ships have been solicited. Those bids are in the hands of the Navy. They're evaluating those proposals. They -- there's an understanding of the cost cap that was introduced by Congress.

I think at this stage we complete the evaluation of the proposals, complete the design, test and trials for those ships. The CNO has been emphatic -- the past three CNOs have been emphatic that this is an important requirement. The cost growth -- they are wrestling with the cost growth to ensure that we continue to meet the requirement. But the -- there's much information to be learned in completing these first ships before building the path for the follow ships.

SEN. MARTINEZ: Thank you, sir

Mr. Benkert, I want to just ask you if you might have any comment on the proliferation issue as it relates to the announcement this morning on North Korea that the president made; obviously the concern with their involvement in Syria -- potential involvement in Syria and what was discovered there just a few weeks ago; and whether you feel that this announcement today is significant in terms of ameliorating or decreasing the threat to the world of proliferation from North Korea.

MR. BENKERT: Thank you, Senator Martinez.

Clearly --

SEN. LEVIN: Why don't you pull that mike right in front of your mouth, if you would.

MR. BENKERT: Thank you.

Thanks, Senator Martinez. I would just note, first of all, that our department and this -- the job to which I've been nominated in particular have been very much in a mode here of supporting the lead, when it comes to North Korea, of the secretary of State, Ambassador Hill. And we are full participants in this process and in particular in the -- in evaluating how one would go about verifying North Korean declarations.

I think, as this process has continued, the prospect obviously is for a significant reduction in the proliferation threat as we go forward.

But again, I am -- within my -- the scope of my competence here, I am in the business of helping to support this process as it moves forward and to ensure that we can verify -- to help ensure that we can verify what is declared and what -- in the process.

SEN. MARTINEZ: Thank you.

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