FY2004 Defense Authorization Budget Request for Navy and Marine Corps Development and Procurement

Senate Armed Services Subcommittee on Seapower Holds Hearing on FY2004 Defense Authorization Budget Request for Navy and marine Corps Development and Procurement

TALENT:
OK. We'll convene the hearing.

I want to welcome our distinguished witnesses this afternoon as the Seapower Subcommittee meets to consider how the fiscal year 2004 budget request and the future year's defense program supports Navy and Marine Corps development and procurement priorities in our first panel. With the second panel focusing on current and developmental Navy shipbuilding programs.

I would be remiss, however, if I did not first state my support for, and gratitude to, our men and women in uniform, many of whom are in harm's way as they participate in Operation Iraqi Freedom, Operation Enduring Freedom, the global war on terrorism and at other outposts throughout the world. Their dedication and courage are an inspiration to us all. And our thoughts and prayers are with them and with their families.

I especially want to express our sympathy and support for the families of those who've lost their lives or have been wounded in the defense of this great nation.

I also want to thank Senator Kennedy whose leadership on this subcommittee has, for many years, ensured that our Navy and Marine Corps team has become the most capable and ready maritime expeditionary force in the world. I look forward to serving with him in the same bipartisan fashion that this subcommittee has been known to practice in the past.

For our first panel today we're pleased to have Admiral Vern Clark, the Chief of Naval Operations and General Michael Hagee, the Commandant of the Marine Corps. Our sailors and Marines whose training and equipment you are responsible for are performing superbly. It's clear that investments in force readiness over the last several years have paid off. The purpose of this panel, though, is to focus on those things that will enable sailors and Marines in the decades ahead to accomplish their missions equally as well.

The department's quadrennial defense review, QDR, issued in fiscal year 2001, established certain force structures as, quote, "the baseline from which the department will developed a transformed force for the future." The capabilities possessed by this force structure were assessed to present moderate operational risk, which could be raised to high risk under certain combinations of war fighting and smaller scale contingency scenarios. In the Navy this force structure is 12 aircraft carriers, 12 amphibious ready groups, 55 attack submarines and 116 surface combatants.

For the Marine Corps its force structure is four divisions, four air wings and four service support groups with three active and one reserve in each case. It should be noted that the force structure supported by the fiscal year 2004 budget and the future year's defense program does, in fact, go below these QDR numbers in certain categories. This follows a number of years during the decade of the 90s when critical requirements in the QDR were underfunded.

At the same time, the operational tempo of our force is extremely high. And world events may require continuing high operational tempo in the years ahead. I believe it's critical that our shipbuilding rates are increased in light of these realities.
The fiscal year 2004 budget request includes funding for seven new ships. This is an important first step with two more ships than were projected last year. But, I want to emphasize that it's only a first step. The ships that are authorized and appropriated for fiscal year 2004 will not be delivered for a quite a few years. Yet, in the near future the Navy is accelerating the retirement of older ships with a fleet scheduled to reach a level of only 291 ships in fiscal year 2006.

I'm aware of the increased capability of the ships now being developed and built, but I'm concerned about the level of risk being assumed by decommissioning ships earlier than originally planned.

CNO, your Sea Power 21 vision conveys the vision of a Navy that will be sea based, deployed worldwide, operating near foreign shores, projecting defense for the United States and allied forces and prepared to strike and remain engaged throughout a conflict. This vision is based on the pillars of sea strike, sea shield and sea basing.

General Hagee, it's this sea basing concept that appears to be the lynchpin for the Marines' expeditionary maneuver warfare concept of operation. You're both to be congratulated on recent examples of how your services are complimenting one another to gain efficiency. An example of this is the tactical air integration initiative. It's important to gain efficiencies wherever possible to maximize in the buying power of each taxpayer dollar.

It's critical, though, to ensure the required increases in readiness, which are necessary if this initiative is to succeed, are fully funded. Again, Admiral Clark and General Hagee, thank you for taking time from you busy schedule to be with us this afternoon. I look forward to your testimony.

And, at this point I was planning to defer to Senator Kennedy for his opening statement, but, Mr. Chairman, would you...
(CROSSTALK)

TALENT:
Thank you, general. We have a vote at 3:45 and I want to make sure the other—the committee members have a chance to ask questions. So, I'm going to ask one right up front and then defer to Senator Kennedy.

Admiral, I want to thank you for your personal kindnesses to me and giving me that really good brief. You took me by the hand a little bit, not only a new chairman, but a new Senator, and your envision is intriguing and powerful. As you mentioned, it depends a lot on the littoral combat ships. Now, as I understand it, there's two parts to that, one is the ship or the frame and then the focused mission modules. And I look at the requirement documents that the Navy's developed so far. It seems to me that you're pretty far along in defining what you want with the ship, with the frame.

I'm concerned about whether you're equally as far along in defining the requirements for the modules. I mean I think we know what we want them to do and it makes a lot of sense, the anti- submarine warfare, the littoral combat. Do you share that concern? I mean are you where you want to be in terms of developing the requirements for that module? And are you where you want to be in terms of the technical sophistication of them at this point?

CLARK:
Well, Mr. Chairman, where I would like to be is that I would like to be at the end of a three-year or a four-year development process, but I'm only a year into it, or less than a year into it.

TALENT:
Are you where you hoped to be at this point, put it that way?

CLARK:
And, so what I would say is that I'm very pleased with the fact that I am sitting here and we're discussing a program that when I appeared before the Congress last year we did not have submitted in the '03 submit. And that it was clear to me, as we were dealing with the world that we were living in, and that LCS was a platform and a part of the family of ships that this was a capability that in the world we live in in the 21st century, I need these ships tomorrow. And, so, I will tell you that I'm extraordinarily pleased with the progress that we have made. If I had known what I know today when we worked on this budget and developed it, I would have put it together differently. But, I didn't know enough yet. And, so, when John Young comes in panel two to talk to you about the things that we have to move LCS along, I want to say that LCS represents a reform in the acquisition process, the spiral development process.

And here's where I am with LCS, we envision block zero, fundamentally the modules being off the shelf kind of existing kind of capabilities that we have today. And if I had known what I know today when I was building this budget and submitted it, I would have had more money in the R&D side of this, but I couldn't justify it as we were making the submissions. I did not have enough knowledge. But, I do believe that we're absolutely going at this in the correct way.

TALENT:
Is that the reason the 35 million...

CLARK:
That's correct.

TALENT:
... new construction money is part of your unfunded priority.

CLARK:
That's correct.

TALENT:
OK. I didn't mean to interrupt. Well, I actually I did mean to interrupt, but I didn't mean to stop you if you had more to...

CLARK:
So, fundamentally I need these ships to deal with what I believe to be the kind of threat that we face in the world where we're operating today and the kind of threat that's going to come after us in the first decade or two, two decades of the 21st century where no Navy is going to go toe to toe with the Navy of the United States of America. They're going to come after us asymmetrically. And we have to be able to deal with these threats in the near land arena.

And what I'm excited about, though, is the issue you raised. If this is a sea frame, we are going after the design of this in a revolutionary way. I won't have to come to—my successors won't have to come to the Congress years from now for a midlife upgrade because this kind of approach to ship ownership is going to allow continuous upgrades. It is the way to develop and create the combat capability. I'm excited about it.

TALENT:
You're saying the whole concept here is that the modules, the nature of the modules would be such that you can—even if you develop the frame ahead of where you develop the module, the frame should be able to accommodate whatever you decide to do with the module?

CLARK:
That's absolutely correct. And I believe that the basic frame has to have fundamental capabilities. It must have self-defense capabilities. We ought to be able to shoot down missiles. We got to be able to deal with the surface threat. But, fundamentally we've defined what this—the missionaries for this ship. General Hagee mentioned them. There are areas that this subcommittee's very interested in. I believe this is the most significant advance in what we've going to—in mine warfare, the wet end of mine warfare that we've seen in years. And I believe that by enabling us to go and create from the design from the keel up, the ability to go after unmanned vehicles in mine warfare and the whole undersea warfare area, anti-submarine warfare in the near land arena. I believe that the future is going to absolutely revolutionize the way this whole area of warfare is conducted.

The first step is we've got to have the frame as rapidly as possible because we've got real world threats and the kind of terrorist environment that we live in today, we need these capabilities with things that we can put on them today, existing, kind of off the shelf capability. We need that as rapidly as we can turn the product.

TALENT:
Thank you, Admiral.
Senator Kennedy?

TALENT:
Thank you, Senator.
Your family had it pretty well covered. Thank you, Senator.
It's sad, something the Senator from Rhode Island said really you're trying to—we're all trying to make up for years when we never hit the bogy for procurement that you all were saying we needed in the '90s. And at the same time fight a war, and at the same time transform. And it's hard. And, even with these additional investments it's hard. And I admire you two for the work that you're doing, and, particularly for the vision that you've showed, Admiral, with Sea Power 21.

General, let me ask you a couple of—I want to just get your opinion on how a couple of your programs are going. First, Triple AV, which is so important to Sea Power 21, a couple years ago you added a milestone sea, I think, to the procurement process and then last year additional testing time. And then this year the budget moves the milestone sea back a year. Well, on the one hand it does seem that you're actively managing, the program's being actively managed to make sure that it doesn't get in any trouble and that's good. On the other hand, you have to have questions about whether we're going to be able to make operational readiness dates. What's your opinion of the technical maturity of the program now? Are we going to be ready by, I think, fiscal 2008 when we're supposed to be ready?

HAGEE:
The short answer is yes, sir. I am confident in it. The longer answer is that there was a number of things. One, the development testing was taking longer than we originally thought. The actual training of the crew was taking longer than we actually thought. And then the operational testing, this is the new system and we're still in the system development phase and we wanted to be sure that we got it right. So, we extended the testing phase by a year in order to do good development testing and robust operational testing. I am confident in the system, sir.

TALENT:
And, are you still confident in fiscal 2008 or is it 2008 for the...

HAGEE:
That's correct.

TALENT:
... was your initial operational...

HAGEE:
... IOC. Yes, sir. I am.

TALENT:
OK. For the record, tell me what's happening, in your judgment with V22, have we resolved the problems? Is it moving along the way you'd like it to move along?

HAGEE:
Yes, sir. It is. It is really doing extremely well. We're about 80 to 85 percent finished with a high rate of decent testing. And it's performing exactly as the model said it would. In fact, the envelope for this particular phenomena is larger than for a normal helicopter. In other words, it's safer than a normal helicopter. And it's easier to come out of the phenomena, all you do is you rotate the nacelles forward and you fly horizontally and you come out of it. It's not quite as easy to come out of the phenomena if you're in a normal helicopter. The maintenance and reliability problems that we had back around 2000, because of the redesign of the system, the number of hours between inspections continues to grow because we see no rubbing, no chaffing at all. We have conducted operations onboard the amphibs that went very well. And we're about 80 to 85 percent complete with the low speed maneuverability testing and that's also coming out very well.

TALENT:
So, so far all systems go.

HAGEE:
All systems go, sir.

TALENT:
That's great. That's great news.
Admiral, let me ask you a question and just—I have a sense that—I have a confidence level, actually that we are OK.

TALENT:
And, yet I want to ask you just because there's several things, when you put them together you say to yourself well maybe I shouldn't have this confidence level. The QDR force structure with a number of ships, you've commented you think that that's a moderate risk type scenario. We're now below the QDR force structure level and we're also at war. You did retire these ships. And I think I agree with it. I mean I think it was a tough decision, but you've got to make those kinds of decisions. But, in your judgment, still an acceptable risk level? I mean comment on why that doesn't move up the risk level in your judgment.

CLARK:
Let me say it like this, sonar system designed for the deep water, not the near land area, a total ray sonar system (ph) in the same—fundamentally the same way, so a ship not optimized for the near land arena, a gun system, a conventional gun system that's relatively short range, 18,000 yards, nine miles. So, it doesn't provide the kind of reach that we're looking for in the future that we've got laid out in the investments for the future. A self-defense air defense system, but not a defense system that can protect anybody else and TLAM. And, so, when I weigh all of those things, I've got plenty TLAM holes, there's not going to be a canister and positions to fire TLAM. That is not an issue. A much more difficult issue for me is the baseline one cruisers, which has an air defense capability. That decision was very difficult. But, the midlife and it's not midlife because they're past the midlife, the conversion to bring it up to where it needs to be to play effectively in the 21st Century and both of these platforms, with large crews in them, this one—the baseline one's do not have vertical launch in them. And, so, for them to play effectively in the kind of game that we have for the future and the either missile defense arena or against the kind of threats that we're dealing with for the future, we've got to put significant resources against them and the life expectancy is, we're not at midlife, but it's shorter than midlife. That's why I made those judgments.
So, the baseline one is a much more difficult than the 963 class. And I want to say I'm personally wetted to the 963. I commanded the class leader. This is hard for me.

TALENT:
You're not dumping on these ships. It's not like they don't have valuable—you don't have all the money you want, you have to make these tough decisions.

CLARK:
I have to make those decisions and I could keep them if some—but, I could not keep them in conscience and look you in the eye and say this is the best way to spend our resources. And I want to assure you that I got zero pressure from anybody above me in the chain of command for this. This is the recommendation of Vern Clark and the team and the United States Navy. This is what we believe collectively is the best thing to do.

TALENT:
Well, let me close unless the Senator Collins has any additional questions. And I'll certainly recognize her for any she may have. On, I think a real upbeat, I know you think the sea swap program has worked well.

CLARK:
It has worked phenomenally well.

TALENT:
Talk about some of the benefits of it and tell us how that compares, in your judgment, with forward home porting.

CLARK:
Well, to start...

TALENT:
... and the synergy that you might be—I mean I don't imagine it's going to be all or nothing at all, but the synergy you see in the future between the...

CLARK:
First of all it was a pilot. And, you know, in our discussions I told you if I have—my view of this, and this is the environment I've tried to create in the Navy is, let's encourage innovation. The fleet came forward with a proposal about how we could try the sea swap concept. I want to tell you that it's their plan. It's their approach. Admiral Lafluer (ph), who is the commander of surface forces in the Navy, told me they have executed the first swap. What it does for us is I didn't have to have the transit all the way from San Diego all the way out to the theater of operations. It saved us the transit two ways by flying the crew out there. So, I just multiplied the effect of utilization of this ship. And, in effect, kind of increased the numbers of ships that I have with on station combat capability.

And, the first experience is complete. We're going to learn some things from it. But, his report to me, through the chain of command through Admiral Nadder and Admiral Dorn (ph) is that it has worked remarkably well. Optimum manning, another concept, how are ways that we can thin down the manning in our ships by giving them technology and other things that will make them more effective. The USS Milieus and Mobile Bay is—they've been out there. I was on them in January. I was on Milieus in January. What a bright eyed group of innovators. And they've cut the ship, the manning in that ship by 23 percent.

We didn't tell them to go do this. We said where can you see areas that we can do this better? Here's one thing I want, I want every sailor to have a job full of rewarding job content so that in positions where they can make a difference. And they're doing that. It's working well.

TALENT:
Well, I thank you both, again, for your service and for your time. I know you're certainly busy and appreciate working with you and we'll continue to do it as we get the bill ready.

CLARK:
Mr. Chairman, thank you for the opportunity to appear before you today.

TALENT:
I appreciate it very much. Thank you.
Well, I think—all right. We'll go ahead and recess and I'll run and vote and come on back so we don't keep the second panel waiting. Thank you all very much.
(RECESS)

TALENT:
All right. I thank the two distinguished members of the second panel for waiting. I'm just going to try and get your statements in anyway why the role call was pending, but I'm not sure we could have done it.

Our guests in the second panel, we've reshuffled because we had to reschedule this and I appreciate your flexibility, are John Young, the Assistant Secretary of the Navy, a figure well known to the Congress and this committee.

Thank you for being here, Secretary Young.

And, Vice Admiral Mullen, the Deputy Chief of Naval Operations for Resources, Requirements and Assessments. I'm looking forward to your testimony.
Secretary Young, please let us have your statement.

TALENT:
I thank the Senator from Rhode Island and I'm certainly also a supporter of multi-year funding. And, greatly admired the CNO's emphasis on stability in funding when multi-year procurements, obviously, is one of the ways to achieve that. I don't think, at the same time, that we can ignore some of the cost problems that we've had with the Virginia class submarine.
In view of that, and the fact that we don't have a submarine in the water yet, are you telling me you have confidence that the Title 10 criteria have been met for a multi-year?

YOUNG:
I believe we have excellent design stability in the program. I believe we know what the program costs are. And we are submitting a new acquisition program baseline that recognizes those costs. I think critical to controlling those costs and not having further growth is that multi-year procurement tool. So, I believe the criteria can be met to justify an award of the multiyear contract or authorization.

TALENT:
I'm not saying you're wrong with that. I'm just saying that, given the problems that we've had from a cost profile standpoint, it's going to require, I think, very active management, careful watching, because we don't want to be in a situation where we discredit this important tool of multiyear funding by not getting the costs under control. And I say this as a supporter of the program.

YOUNG:
No, and I think that exactly true and, sir, to that point, we've also recently set up and executive committee, almost like V-22 to go and implement some of those management discipline tools, maintain control of the configuration, ensure that progress is being made and decisions are elevated to the highest levels so that you can, indeed, deliver it to schedule and cost. So, we're working to put in place the tools, because I couldn't agree more strongly with your comment, multiyears have been a successful tool in building people's confidence in schedule and cost and we need to preserve that.

TALENT:
Yes, and to be fair, some of this cost overrun, as we all know, is not the shipbuilder's fault. I mean there's mitigating factors here. It reminds me a little bit of when Bill Perry took the C17 in hand and ended up with a great aircraft.
Well, I wanted to make that point and I appreciate your comment on it.
Admiral, if you have anything you want to say, feel free to jump in on that.

MULLEN:
Well, just to enforce the comment you made about what the CNO has discussed, stabilizing these two accounts, both the aircraft account and the shipbuilding account, is a very high priority for us. There are lots, over the years, that's been a very difficult challenge because they are such big accounts and we have, many of us, myself included have over the years had a habit of reaching in there to make other things balance and trying to figure it out later on.

We are working hard to turn that corner so that we leave those accounts alone and I've watched Secretary Young for the last year and a half and the senior Navy leadership really work hard to stabilize it. And in the long run, I think that's really what's going to give us a healthy Navy in the future.

TALENT:
Yes. And I think we all have to just agree that we're going to forfeit that unbridled discretion to reach in those pots of money every year, you know, as the wind moves us. And, I'm certainly willing to stand up for that here on the Hill. We just have to have active management and programs that have had some concerns.

I want to follow up on a question Senator Kennedy asked regarding the advanced gun system for the DDX and the CNO said he was confident it would meet the Marine Corps' requirements for both rate and volume of fire and I was pleased to hear that. Now, Mr. Secretary, there's a reevaluation of the performance parameters for DDX underway now. Is that advanced gun system part of that reevaluation? Is it being considered for downsizing? And, if so, how would that effect the Marine Corps' requirements that Senator Kennedy asked the CNO about?

YOUNG:
Well, I think the answer—the best answer to the question I'd take a step back and say as we move forward, this ship is very important to the Navy. It will be both the land attack destroyer fighting for the Navy out into the 2050 timeframe and then it is the platform that, hopefully, will enable CGX without significant additional investment other than the radars and sensors for it. So, it's worth taking some time to look at the requirements and make sure we have it right.

The advanced gun system you mentioned is a significant driver in the size of that ship. And size, and you're even more familiar than I with airplanes, you know, weight and cost tend to have a correlation. So, it's worth taking some time and making sure we've got the requirements right, because the fire support requirement is substantial.

Do we need to execute all of that requirement by having a very large magazine on the ship? Because that and the guns drive a size into the ship. Or do we need a better resupply concept for that ship so that we resupply it with rounds and there are two ships firing and things like—so, we're sitting down and looking at the operational doctrine, which brings operational Navy to the table, looking at the acquisition side in terms of what we can do with the size and volume we have and trying to make sure we also build a ship that's not exceedingly dense, because I think one of the cost factors in the DDG's today it's a smaller ship, but it's a very dense ship, which drives an intensity, if you will, into the labor and the cost of the ship.
So, we're taking another look at both the requirements, space and then what the acquisition side can deliver to make sure we've got it right as we get ready to move to the next important step of designing and locking the ship.

TALENT:
Is it fair to say then that in this reevaluation you are looking at the advance gun system? You just weren't being open-minded about it, if you will, in no way retreating, though, from the need to meet the Marines requirement for naval gun support.

YOUNG:
I think that is exactly true, the right way to say it. In fact, I hesitate to elaborate, but I think the range—we want to make sure we've got the range right, the rate of fire right and the weight of the projectile. So, it's a full spectrum look. Are we going to put enough warhead on the target? It's clear that URGUM (ph) and the five-inch 62 gun take a step in that direction. That step, we're kind of revalidating is still not quite enough and people are growingly convinced that you have to have the advanced gun system to proceed with that.

We need this work to also inform us about what we'd expect from a rail gun because that may be a future tool to get even more range and a higher rate of fire. So, I think it's worthwhile. I think we owe it to you all to make sure we've relooked all the system choices and we feel confident about this path that's going to be both the path to AGS and then an element of this will be the path of the future in terms of rail gun and what technology investments we made in S&T.

TALENT:
Admiral, a tomahawk missile inventory, I know the inventory is low and it needs to be resupplied. You seem to be committed to doing that through block four procurement rather than conversion of the older variants? Do I have that right? And, do you want to comment on that?

MULLEN:
Yes, sir, I've said and I've been involved in the tomahawk business for a few years. And the inventory is, while it has recently increased, because of, in great part, a tremendous support here on the hill, the current execution of the operation we're in is—continues to make the point of how fragile that inventory is. We're in the second big remanufacture effort right now and to remanufacture older missiles into what we call block three missiles as we speak. And where the CNO is on this and Secretary Young and I have discussed this at reasonable length is—and the CNO talked about it in his testimony, is we really believe we need to move forward, to the tactical TOM, the block four, bring that to bear, be guarded about ensuring—one of the great success stories in my view of tomahawk has been over the years in a pretty rigorous testing system. We've rung that missile out with a very healthy test program. And, so, we need to honor the law and the needs of an acquisition system to bring the new missile through that.

And the remaining missiles that we have to remanufacture are exuberantly expensive to do so. On the order of the estimates 1.6, $1.7 million a missile. And, so, it is our conviction we need to move forward, not go back to that last group of missiles, which are very old and basically just shells that we'd have to make new missiles out of. We would like to ramp up, and I think Secretary Young can speak to the details of this, we'd like to ramp up as early as we can, as quickly as we can from a capacity of on the order about 38 a month to 50 a month, make the acquisition strategy work and then once we have reached, as the CNO said, full rate production, buy as many as we can.

YOUNG:
If I could, Mr. Chairman, I think Admiral Mullen said it exactly right, because of the condition of the missiles that remained to be remanufactured and because to do the remanufactures that have been to date efficiently we bought out some of the parts. So, we would have to go back and requalify sources and do some reengineering on pieces of it. So, the best you do is get additional remans out of this group at a fairly high price in 24 months from now. We can, for less money, significantly less—over the same time frame of getting about 300 more remans, get 300 remans on close to the same schedule, maybe not quite as fast, even closer if we're willing to take some risk in this area. And this is an area where, because of the war, we may want to take some risks and buy tomahawks. The three tests have gone almost flawlessly to date, and all the basic parameters have been demonstrated. This is not a brand new system where we're reinventing the wheel. This is a system where we are reengineering the parts to bring the cost down and doing so very well.

As you know, the new tomahawks are going to be on the order of $569,000 a copy, that's the promise. So, we would like to work aggressively to stop up that production rate faster and to a higher level as soon as possible as the most efficient way to get more missiles and replace the fact that we've burned through the inventory here.

TALENT:
You know, you've mentioned several times, just constant emphasis, which I really appreciate, on looking at—rolling up your sleeves and getting involve in the details of these programs, discovering efficiencies, making dollars go further, making the tough choices, and I appreciate what you have done working with our partners in the shipyards to begin revising those manufacturing processes so they can get the same kind efficiencies. I know that we have made progress in that area and I know that that's the result of a partnership, but a lot of it is the initiative that's come from your offices. And I want to compliment you on that. Do you want to comment on how that's going? I mean you sort of referred to it a little bit. But, do you have any comments you want to make?

YOUNG:
No, I appreciate the chance to just say a couple of brief things. Again, some of it because of my awareness to your background, you've seen. But, the shipyards have been on their own very aggressive and embracing lean manufacturing. You can go to Avondale and see what used to be a very messy workspace now efficiently lined so the distance traveled by the work force is minimized; the tools are there for them to do the job. You see the same thing at Engel's. You see the same thing at Bath when you visit the shipyards. Newport News has implemented an enterprise resource program, which the Navy on its own is trying to implement across our enterprise.

So, you manage your supply chain. You know when the parts are there, they're scheduled properly. So, I think your point's well- taken the step that we've also tried to enforce is discipline and process. We've got a fund. We need to make plans for the design changes we what to implement in the ship, lock that down and let the yard plan to build that ship in accordance with that configuration and not create churn. Because our accounting systems and budgeting process are not amenable to the delay and disruption that you inevitably put in when you decide to change something on the waterfront. And we need to do that in a different way. And those are the steps we've taken, stop generating the prior year completion bills, as well as be more efficient in our new build program and the shipyards are taking a lot of initiative on their own.

TALENT:
I ought to visit because that's exciting to watch as manufactures do that. And you're right, I do have some history of that with TACAIR and I'm certain that they are and I hope that they are inculcating the concept all the way through the workforce. In other words, a lot of this comes from the guys and gals on the line who are doing this work. I mean, once they get that sense that the top leadership is committed to updating and this lean manufacturing it is amazing what they'll come up with. And it might be a good opportunity or a good subject for me to visit.

Let me close with how I started to get your comments on how LCS is doing and particularly the mods. You were here when I talked to—when I asked the CNO about this and I really support this idea and I've sort of caught his vision, your vision for this. It is kind of ambitious, though, to be building a ship frame, first of all, the whole concept is ambitious. You have a frame of a ship and then you're going to put mods in it and then pull them out as you change the mission for that particular ship.

To engineer the frame, you know, before you've the mods. I mean you want to comment on that, Mr. Secretary, and then maybe Admiral Mullen, if you'd comment on if you've had an estimate of cost or range of costs for the mods that you have available at this time?

YOUNG:
Well, I think that last discussions important. And that is when we make decisions to change a combat system or something today, a lot of time you have to go into the ship, in the yard, or on the waterfront and change the foundations and other things to land it. And, so, to give credit, I think Secretary England and I talked through some of this in the beginning with the CNO and he brought his vision to bear, but I hope that sea frame is something like this room where there, throughout the room regular drops for power and communications and cooling and the things you need, so increasingly you see this in today's ships. You go on a DDG you'll see a lot of laptops that have been brought onboard. I believe we can in the future bring the combat system aboard and laptops and test it at a land-based site and implement on that. And, so we need most importantly to have a sea frame that has space and it has ride quality so that in this littoral environment the sailors are comfortable performing their mission. So, we need to focus on getting the ship that's about the right size, given we know, as the CNO said, we want RMS onboard. We want a certain amount of air defense capability and we can roughly allocate those budgets, if you will, to the ship, focus on getting the hull right so we get the speed and the stability we need and then make sure the combat systems going forward try to conform to that space, hopefully, to have more than enough margin so we have some growth margin. The same thing that is done in F-18EF, the big enough airframe to have margin space to bring additional combat systems on board. We will try to put some margin in that sea frame so we don't find ourselves constrained in that regard.

MULLEN:
Sir, a couple of recent data points that I think are really important. This is a warship and we talk about it in a lot of terms. But, CNO first and foremost, reminds us that this is a warship we're going field to be able to get in the ring and stay in the ring and win while we're there and do some missions that are very challenging for us right now in the mine warfare area, the diesel submarine area, as well as the surface ship kind of defense or both attack and defense if you will.

Where other ships can't go because we don't have them in numbers or we're restricted to get them in that close, if you will, in certain environments. The issue of modularity has come up and what does that mean? To a certain degree and I think this the part of the CNO's vision, as well as how both Secretary England and Secretary Young have talked about this, the CNO was overseas in a European country not too long ago that has a small Navy. And he watched inside 15 minutes a 76-millimeter gun, which is the same sized gun we have on our FFG's, essentially from the time the clock started until it was doing firing checks was about 15 minutes. From being on the peer to putting it on the ship. Now, to me that concept or that kind of modularity with a very capable gun, if you will, or whatever we're going to bring in these modules is really what we're after to be able to hook up into the kind of capability, water, air, heat, power, those kinds of things, cooling, that Secretary Young mentioned a second ago.

So, we're excited about it. It is moving quickly. And, certainly what he said is true, a year ago we didn't know enough to really put what I would call to properly budget for the modules, which is—and the way we answer that is to take some of the off the shelf the stuff, he used the example of several RMS's in the mine warfare area on an LCS for example. And there are other off the shelf technologies that would go to the first two. Not unlike moving it quickly with the money we've got in it this year, which we got help over here for, we need to do the same thing in the modules, which is why we've asked for it in the unfunded program list. And it really is risk reduction money to get us to what's it going to be in the seven eight timeframe.

TALENT:
That $35 million is really pretty important to you.

MULLEN:
Yes, sir. It is in that regard.

TALENT:
And that's part of the record I'm—I mean I see this really at the crossroads of the whole Sea Power 21 vision. And one of the reasons I'm asking so many questions about it is I have a feeling if I can understand it better than I'm going to see the direction that you all are trying to go with this thing and we're going to make a lot of progress on this in the two years that I'm chairing this subcommittee. So, I want to really partner with you on it. I interrupted you, but go ahead and finish.

MULLEN:
No, sir, I mean that was essentially the end of what I had to say. On the overall costs, there is, back to the land attack destroyer, one of the initiatives there, while it is the technology center for our R&D base for surface ships, which three or four years ago was virtually non-existent, that's why that money that's over here right now in R&D and DDX is so important to us, because clearly it's going to develop the DDX technologies, but it will spin to LCS. It will spin to CGX. And my view, if we do it right, it'll spin to just about any kind of seagoing vessel, submarine aircraft carrier that we build. That's one piece. The volume as far as in precision that the CNO talked about, which is critical. And in the armored world, 155 round is what does it. The 5-inch round that we have right now, as we explore this over time is not the one that was able to answer the mail even with the increase precision that clearly the technology brings now.

The other piece of that is DDX is going to be manned with a very small number, a third of the crew typically than we have on destroyer. And that has forced major investment in technologies, if you will, to support that. That will spin off to LCS so it will be properly manned at a very small number. We think, but we don't know what that number is yet. The whole idea is we want the cost of both the modules and the ship to be absolute minimum. It cannot approach the billion dollars a year we're talking about right now in DDG's for instance. It has to be well below half of that in my view.

TALENT:
Well, because this is how you're going to meet the need for service combatant vessels isn't it? I mean this is—and, I'm really intrigued and attracted by the ambition of this and I do intend to follow it carefully with you and to be supportive of your efforts in it. And, you're right, a few years ago we just said you're trying to square the circle, I mean build a ship with a multi-mission capabilities that you can easy and quickly modify to perform a number of different functions, fitting in with the sea basing concept that you're also still developing and doing all that at rock bottom price. And a few years ago I'd of said you can't do it. But, I think you guys probably can do it.

Maybe that's a good note on which to end the hearing. And let me just make sure that I haven't neglected to ask anything that people are panting to have me ask.
Thank you all for coming and we'll adjourn the hearing.