Caught in the Undertow

The Navy does battle to maintain the size of its fleet.

After taking numerous shots across the bow of its DD(X) destroyer program in recent months, the Navy recently sounded an all-hands-on-deck in support of the next-generation ship. Leading the spirited defense was none other than Chief of Naval Operations Adm. Vern Clark.

"The DD(X) program is the technological driver for all of the ships that will exist in our Navy, so we have to have this ship," Clark said at a June symposium in Washington on the Navy's future. "We desperately need the technological capability that's going to come to us through the DD(X), and then spiral through the whole rest of our force."

The problems facing Navy shipbuilding are similar to those confronting the other services-runaway cost growth and an aging arsenal. Because shipbuilding is such a capital-intensive and time-consuming enterprise, however, the problem is particularly acute for a Navy that already is smaller, in terms of numbers of ships, than at any time since World War I. As ship costs continue to rise, the Navy can afford fewer of them, meaning future reductions in a fleet already stretched by global commitments.

In recent congressional testimony, former Navy secretary and acting Deputy Defense Secretary Gordon England referred to that dynamic as a death spiral. "If the costs go up, then we build less ships," England said. "If we build less ships, each one costs more. So we need to break this cycle."

In assessing eight ship construction projects in a recent report (GAO-05-183), the Government Accountability Office found that Congress was forced to appropriate an additional $2.1 billion to cover cost increases. Total growth on those eight programs was likely to reach $3.1 billion or more, GAO found, if shipyards could not bring overruns and schedule slippages under control.

Meanwhile, that cost growth prompted the Navy to request just four new ships in fiscal 2006, two fewer than planned and far below the eight or nine it needs each year to maintain the current size of its fleet. The House recently inserted language in the fiscal 2006 Defense Authorization bill that would cap DD(X) funding at $1.7 billion per destroyer. That's well below the $3.3 billion the Navy says it will need to spend on the lead ship, or the $2.75 billion needed for follow-on ships.

Nor is the rapid cost escalation limited to the DD(X). The GAO has found that cost growth is even more pronounced in the LPD-17 amphibious transport program and the new CVN 77 aircraft carrier. As a result of cost growth and the resultant budget squeeze, the Navy's five-year plan now calls for nine LPD-17s rather than the original 12, and fewer Virginia-class submarines as well. The Pentagon already had proposed reducing the aircraft carrier fleet from 12 to 11, and it has canceled the $9 billion Navy Area Missile Defense Program.

"When we have an increase in cost of an aircraft carrier from $3 billion to $13 billion in 2005 dollars, we're just pricing ourselves out of the business," Sen. John McCain, R-Ariz., said during a recent Armed Services Committee hearing. "And the thought of having fewer ships in the U.S. Navy than at any time in the last 100 years, in an era when we are facing a challenge from the emerging superpower of Asia [China], is something that I think should concern all of us."

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