Smart Buying Drives Modernization

John Douglass likes to show visitors his model of the USS Brooklyn, the Navy's first battleship designed without sails, which sits in his Pentagon office. Although the Brooklyn went to sea almost 100 years ago, she has all the relevance in the world for the Navy's procurement chief in 1996.

"If you look up front here," he says, pointing to the model, "you see this little round hole. That's the very first underwater torpedo tube. The size of that torpedo tube dictated the size of the cruise missiles that fell on Baghdad over 90 years later. That's how long technology has to last us."

Douglass, assistant secretary of the Navy for research, development and acquisition, thinks a great deal about the past as he looks to an uncertain future: The United States didn't know who the enemy would be when it designed an aircraft carrier in the 1920s, he says. "We did not think we were going to fight a war with Germany and Japan. We thought the war to end all wars had occurred. If we had not had that weapons system during World War II we would have lost the war in the Pacific. There's no question about that."

Such are his thoughts as the Navy begins to design the CVX, a new class of aircraft carriers this year. "We lay the first keel in 2006 if we stay on schedule. She goes to sea in 2013 and she has to last 50 years. That means she'll come out of the ocean and go on the scrap heap somewhere in the 2060s. Her sister ships will last probably until the end of the century. The design decisions the United States Navy makes on that ship over the next 15 years have got to last us 100 years, just like the designs on that torpedo tube lasted 90 years. That's the kind of technological challenge we face in the Navy."

It's a challenge the Navy faces with fewer resources and an increasingly uncertain future: Since 1985, the Navy's total budget has dropped from $128 billion to $75.6 billion-the Administration's request for 1997. At the same time, procurement has declined from 34 percent of the Navy's budget down to about 22 percent, Douglass says.

"You have to go back to the early 1930s to find a year when we bought [fewer] than six ships and you've got to go back to 1938 to find a year when we bought less aircraft. The American public does not understand that. They know there's been a decline, but they do not understand we are at a level of new procurement lower than before World War II," he says.

Budget Shortfalls

In a recent interview with Defense News, Vice Admiral Thomas Lopez, deputy chief of naval operations for resources, warfare requirements and assessments, said "What I need at the turn of the century is $4 billion to $5 billion a year [more than is projected for modernization] and the only way to get it is through savings." Even with the projected savings from closing naval bases and reducing infrastructure, the Navy would still need another $15 billion through 2010 to fund its modernization programs, he said.

Exacerbating the Navy's budget problems is its reliance on the aircraft carrier as the centerpiece of its forward-presence mission, says Andrew Krepinevich, director of the Center for Strategic and Budgetary Assessments, a nonprofit, public policy research institute.

Krepinevich advocates the Navy reduce its reliance on the carrier for maintaining strike and forward-presence operations and shift it to developing a "distributed" capital ship-a network of long-range strike platforms, including carriers, surface combatants and submarines armed with vertical launch systems capable of firing long-range precision-guided munitions.

Krepinevich estimates it costs $1.8 billion per year to equip, operate and support a single carrier battle group, with a carrier costing about $4 billion to construct. The figures do not include the cost of the carrier's air wing, or combatants and support ships that comprise the carrier battle group.

While the new CVX may address some of Krepinevich's concerns, the Navy is now pressing for another Nimitz-class carrier, the CVN-77. "Given existing resource constraints and an emerging military revolution, the Navy has both fiscal and warfighting reasons to begin reducing its emphasis on carriers and increasing its emphasis on experimenting with a distributed capital ship," Krepinevich says. "With their high cost, increasing vulnerability, and declining competitive advantages in projecting both presence and power, carriers, in their current numbers, are a luxury the Navy and the nation cannot afford."

One positive trend toward the distributed capital ships Krepinevich sees is the Navy's development of the arsenal ship. The arsenal ship would have massive strike capability, carrying 500 to 1,000 precision guided missiles. It's small crew (50 sailors by Navy estimates) and semi-submersible hull would make it strategically smart as well as affordable. The Administration has requested $25 million to begin development of the new ship. Both the House and the Senate support more funding for the program.

Other Navy sea priorities include the Seawolf submarine, the first of which goes to sea this summer. The Navy expects to spend $699 million in 1997 to develop the third and final Seawolf-class attack submarine. The program is within the congressionally mandated cost cap of $7.2 billion, but "We are about as close to that cap as you can get," says Douglass.

The Navy's New Attack Submarine (NSSN) program promises to be one of the most complicated DoD procurements. The Administration requested $784 million for the program in 1997, including $269 million in procurement funding for design work and $488 million for research and development. Under the Administration's plan last year, the first NSSN was to be procured in 1998 and the second and third boats in 2000 and 2002. All three and any subsequent NSSNs were to be built by General Dynamic's Connecticut-based Electric Boat division. However, the 1996 Defense Authorization Act stipulated that four boats be constructed as one-of-a-kind prototypes and be procured between 1998 and 2001. Congress directed Tenneco's Virginia-based Newport News Shipbuilding and Drydock Co. to construct the second and fourth boats.

"The New Attack Submarine has been one of our most difficult management problems because the Senate and the House haven't agreed on how they wanted to pursue this program. We had direction to redo the whole program and make it a competitive program," Douglass says. "The trick is to keep them competing against each other over the life of the whole system. The way we plan to do it is we'll buy in uneven quantities. Every couple of years we'll buy three boats or five boats and we'll say loser gets one and winner gets two, so there's an economic incentive to be the lowest cost, better design."

Another challenge for the Navy has been the DDG-51 Arleigh Burke guided-missile destroyer, the Navy's major surface combatant. The Navy plans to spend $3.4 billion for four DDG-51s in 1997, including one for which Congress authorized last year but failed to fund.

"We're on track and on schedule with the program now," says Douglass. "In 1996 they gave us the money for two ships and said go buy three. Well that's pretty hard to do. By combining '96 and '97 funds, we were able to wrap the two years and buy six ships, in a kind of mini multi-year procurement."

Air Priorities

Among the Navy's procurement priorities is the F/A-18E/F Super Hornet fighter, one of its most successful programs. The Navy plans its first low-rate production in 1997, with the purchase of 12 aircraft for about $2 billion, plus additional funding for more aircraft in 1998. So far, the program is under budget and ahead of schedule. Ultimately, the Navy plans to buy 1,000 of the fighters for a total of more than $80 billion.

The Navy also expects to spend $65 million on the development of upgrades to existing F/A-18C/D fighters. While the Administration doesn't plan to purchase any new aircraft, some Senate lawmakers are pushing for six new F/A-18C/Ds in 1997.

Another high priority is the tilt-rotor V-22 Osprey for the Marine Corps. The Administration plans to spend $577 million for research and development and $501 million for procurement of the first four V-22s in 1997, plus $58 million for advance procurement of five V-22s in 1998. "The challenge with this program is we have tried to hold down our investment to a certain amount per year and if we do that it's going to take us 27 years to buy the thing out," Douglass says. "I'm looking at ways to shorten up the procurement so we can buy more. We're going to look at multi-year procurement and other ways to get the price down."

The Marine Corps intends to purchase 523 of the vertical takeoff and landing aircraft to replace the service's CH-46 and CH-53 helicopters. The expected cost: $47 billion. Lawmakers in both the House and Senate plan to speed up purchase of the V-22.

Along with the Air Force, the Navy and Marine Corps are developing the Joint Strike Fighter. The Administration's budget would provide $589 million for the program in 1997, with the first operational aircraft scheduled to be delivered in 2008. Congress supports the program but may restrict development of a short-takeoff, vertical landing version of the aircraft.

The biggest challenge for the Navy is maintaining program stability, Douglass says. "There is a tendency when you get a budget cut for people to say, 'Take the cut but don't take anything out of the budget.' If I'm buying 100 airplanes, they say tighten your belt and buy them better. Ultimately at some point you can't do that. We've got to be honest with ourselves. We've got to keep the programs that we have healthy and get solid value for the money."

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