The decision reflects a growing consensus in the powerful shipbuilding industry and on Capitol Hill that the Navy lacks a thorough and consistent plan for its future fleet.
The Pentagon's fiscal 2006 request sought four new ships, a drop from double-digit procurement two decades ago.
House appropriators increased buys to eight ships, while House authorizers set aside money for seven. The Senate Armed Services Committee authorized four ships, but added money to accelerate development of the next aircraft carrier, amphibious assault ship and the next-generation destroyer. Senate appropriators have not marked up their version of the bill.
For years, the U.S. shipbuilding lobby has pressed Congress on the importance of funding development and "new-build" programs to keep the shipyards running, and prevent a highly skilled army of engineers, designers and other specialists from seeking other, more stable professions.
Industry leaders also have lobbied Congress to inject more stability in the Navy's shipbuilding plans because several programs have been scaled back in recent years.
Today, the fleet is just shy of 300 ships, including 12 aircraft carriers, 55 attack submarines and 102 surface-combatant ships.
By 2016, the total number of ships is expected dip to below 200, just as China's fleet surpasses the Navy's in sheer volume. Within five years, China's submarine fleet could be twice the size of the Navy's, according to American Shipbuilding Association statistics.
There is an "overall concern" in the industry and Congress over whether the Navy's shipbuilding plans are sufficient to meet the military's future missions and to sustain the industrial base, said Robert Work, an analyst at the Center for Strategic and Budgetary Assessments.
The entire shipbuilding plan is in a "state of disarray," Karl Hasslinger, a former submarine captain and a strategic analyst at General Dynamics' Electric Boat outfit, said Monday at an American Enterprise Institute event. And, without stability, costs often spiral out of control, he added.
Cynthia Brown, president of the American Shipbuilding Association, cautioned that the Pentagon's indecision on the next-generation DD(X) destroyer program in particular could drive up costs, which have already soared to $3 billion per ship.
"You can't have stable costs if you never have a stable plan," Brown said.
If the pricey DD(X) gets canceled, it will be another "in a string of unsuccessful surface combatants," Hasslinger said. In the last decade, the Navy has canceled its Arsenal Ship, as well as its DD-21 destroyer.
The Pentagon's initial plans for the DD(X) destroyer, for instance, called for 32 ships, but that might get sliced to 12 as the department reins in Defense budgets over the next five years.
But while Congress has backed several shipbuilding programs, including the DDG destroyer, the DD(X) is not one of them. House appropriators and authorizers gutted the $716 million from the Pentagon's request for DD(X) advanced procurement, largely because of concerns over rising costs.
House Armed Services Projection Forces Subcommittee ranking member Gene Taylor, D-Miss., said he voiced concerns about the program to senior Northrop Grumman officials Monday night. Northrop, whose Ship Systems Sector falls in Taylor's district, is building some of the ships, as is General Dynamics.
The Navy has done a "poor job lobbying for the DD(X)," Taylor said. The service, he added, has been "inconsistent in its approach" and has not justified to Congress the destroyer's growing price tag or its relevance to the future force.
A spokesman for Northrop Grumman said there is a general concern and a sense of urgency over the state of the shipbuilding industry each year, but added that concerns were not heightened this year. Congressional sources generally shared the sentiment, but one aide said frustrations are coming to a head.
"For the last eight years, the Navy said, 'Look, this year is a tough year, but it's the toughest we have on the books. Next year, we'll turn the corner and start ramping up the money,'" said a congressional aide familiar with shipbuilding. "Will the real Navy please stand up? Do you want ships or not?"
Concerns over the sector are heightened by a general fear in Congress that competition is declining rapidly, Work said.
Prime contracts generally are limited to two major players, General Dynamics and Northrop Grumman, who control naval shipyards nationwide that might face harsh blows if the Navy ceases development or production on ships in the works. Meanwhile, more and more of ship subcontracts are being selected under sole-source contracts, sources said.
The blame for the state of shipbuilding, the congressional aide said, might fall partially on industry's shoulders. U.S. shipyards are considered less efficient than their counterparts in Europe and Asia, largely because the industry has been reticent to automate a number of processes.