Hearing Of The Subcommittee For Seapower And Expeditionary Forces Of The House Armed Services Committee - The Fiscal Year 2011 National Defense Authorization Budget Request For Department Of The Navy Shipbuilding Acquisition Programs

Statement

"Good afternoon. Today the subcommittee meets in open session to receive testimony from Department of the Navy witnesses on the shipbuilding budget request for the coming fiscal year and the proposed shipbuilding plan for the next thirty years.

"Because the shipbuilding plan has such a large effect on the shipbuilding industrial base of the nation, the subcommittee has also requested that the two leaders of our largest shipbuilding companies appear to discuss how the plan, in their view, affects that industrial base, and if they are willing, to recommend changes to the Congress on ways to achieve the goals of the shipbuilding plan in a more cost effective manner.

"First, I would like to make some observations on the shipbuilding plan. As some of you may remember, a few years ago I referred to the shipbuilding plan the Navy submitted as "pure fantasy'.

"Shipbuilding plans in the past have been full of unrealistic assumptions about the cost of ships and unrealistic assumptions on the amount of money the Navy would receive from the Department of Defense for buying those ships. The unrealistic portions of the plan always started just beyond the five year procurement plan, because the Navy was not obligated to justify its assumptions on cost and budget past five years.

"Today I will make a slightly different observation. The plan submitted by the Navy this year is not "pure fantasy' as in years past, but it is optimistic. It is very optimistic. The plan as submitted by the Navy, if funded and if executed within that funding, would restore the Fleet above 300 ships by 2018, peak at 320 ships in 2024, but return to a Fleet size in the 280's by 2032. The plan would maintain aircraft carries levels at 11 with some years 12.

"The plan would not meet the Marine Corps requirement of 38 amphibious assault ships, but would hover around the 33 ships the Navy and Marine Corps have stated is the minimum number of ships that would meet an acceptable level of risk. The attack submarine force goes below the requirement of 48 boats in 2024 and stays below that requirement thru 2040, with a low of 39 boats in 2030.

"Although it is very clear that the Navy has worked harder on removing "fantasy' from this plan, the plan does not build the number of ships at a satisfactory rate to restore our Navy to the full capability that I believe is necessary.

"The Navy was clearly limited in the development of this plan by the amount of funding for ship construction that they were provided by the Department of Defense. Some relatively simple arithmetic indicates that the Navy really needed about $10 billion more per year than provided.

"Leaving aside the issue of underfunding, the shipbuilding plan is troubling in a few areas. First, the procurement of amphibious assault ships is occurring in an inefficient manner, the ship construction starts are not spaced to optimize the workforce or the supply chain.

"You just cannot stop and start shipbuilding programs and expect any cost savings in quantity buys or in workforce familiarity. I know the Navy knows this, and certainly the one official in the Navy who knows it best is sitting at the witness table today. Yet the Navy has still decided to place the amphibious ships in the plan in years which ensure extra costs due to inefficiency. This goes back to my previous point that the Navy really needed about $10 billion more per year.

"If that were the only issue with the long term plan, it would probably be fixable. But the real issue facing the Navy is the cost to recapitalize the Ohio Class submarine. Billions in development costs followed by 12 ships each costing anywhere from $6 billion to as high as $8.5 billion will crush the rest of the Navy shipbuilding account, if the Navy is required to pay the bill. The submitted plan assumes the Navy will pay all the costs for these boats and has a very optimistic assumption that extra funding will be available to cover some of the costs. During the years that these submarines are funded the rest of Navy shipbuilding is on life support.

"Minimum levels of surface ship construction will occur during these years according to this plan and the Navy will lose over 30 ships from the overall force between 2024 and 2034. And that is optimistic. I have been around long enough to know that the reality is that increased funding will likely not be available and even more significant cuts in surface ship construction will occur.

"On the positive side, the Navy five year plan is better than any plan that has been submitted in a very long time. Fifty new ships, an average of 10 per year, is an achievable goal with projected funding. The problem is that the Navy is decommissioning ships as fast as they are bringing new ships into the Fleet and overall force numbers don't start to increase until 2016. I expect our witnesses today to discuss why this has happened and provide this committee with options to retain some of these vessels in service while new ships are built to replace them.

"LTGEN George Flynn, Commander, Marine Corps Combat Development Command and Deputy Commandant for Combat Development and Integration. Our second panel will consist of: Mr. Mike Petters, Corporate Vice President and President, Northrop Grumman Shipbuilding, and Mr. Dave Heebner, Executive Vice President, marine Systems, General Dynamics Corporation.

"I thank all the witnesses for attending; I believe everyone has appeared before this committee at least once with the exception of VADM Blake. Welcome to you all. I turn now to the Gentleman from Missouri, the Ranking Member of the Subcommittee for any remarks he may wish to make."

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