Rough Seas for Navy Programs

What if they held a competition and nobody came? That's essentially what happened when the Navy sought bidders to build the DD-21, the service's next-generation destroyer.

Bath Iron Works and Ingalls Shipbuilding, the nation's two top destroyer manufacturers, joined forces with defense giant Lockheed Martin in January to bid jointly for the $26 billion, 32-ship program. The mega-team was blasted by other would-be competitors as essentially locking out competition.

That wasn't the way the Navy had planned it. So on June 5, the Navy issued a revised request for proposals, requiring "the formation of two independent and competitive teams," one headed by Ingalls and the other by Bath. Ingalls then teamed with Raytheon Systems to compete against a Bath-Lockheed team. Each team will receive $105 million to develop substantially different concepts for the DD-21 over the next three years. Each team will also incorporate engineers from the competing shipyard, to ensure that no matter which design wins, it can be manufactured at either shipyard. Even after a design is selected, the shipyards will continue to compete for production contracts.

"We simply have to create an environment in which more than one team can compete," says John Douglass, assistant secretary of the Navy for research, development and acquisition. Douglass attributes problems the Navy had attracting competitors for the DD-21 to the cancellation of the arsenal ship program late last year.

The arsenal ship was to have been a new class of warship with a radically different design and the potential to revolutionize both naval warfare and shipbuilding. It was to carry up to 500 missiles and be operated by fewer than 50 crew members. After development, the Navy planned to spend $500 million each for six ships, a bargain compared with other ships.

The innovative program had as many foes as backers, however. Supporters of Air Force bombers and Navy carriers both saw the arsenal ship as a potential threat to funding. When Congress slashed this year's arsenal ship budget to $35 million, the Navy and the Defense Advanced Research Projects Agency, which had also sponsored the program, were unable to come up with the additional $50 million necessary to keep it alive.

"We're still feeling the implications from that," says Douglass. "It's affected the contractor community to a large degree. We had five or six teams bidding on the arsenal ship. Now we have one team bidding on DD-21. We're having to rearrange our whole strategy to try and get more competition. It's thrown a bigger burden on DD-21 because things we were hoping to do with the arsenal ship we're now having to do for the first time with DD-21."

Under the revised DD-21 strategy, Douglass expects to have creative solutions to the Navy's needs for an efficient ship during the development phase of the contract, as well as competition during the production phase. "You get innovation through competitive teams, which are able to bring you different concepts for what the system should be," he says. "But you don't want to then be sole source for the next $25 billion. We want at least two shipyards in the back end of the program building these ships. It gives us a year-to-year comparison on how two [shipyards] are doing building the same product. If one gets overly expensive, we can always go to the other."

Ship Programs

The DD-21 surface combatant is to replace existing DD-963 destroyers, FFG-7 guided-missile frigates and, eventually, DDG-51 Arleigh Burke-class guided missile destroyers. Construction of the first DD-21 is scheduled to begin in 2004, a year later than the Navy was planning in last year's budget.

The administration has requested $2.8 billion for procurement of three DDG-51s in 1999, plus another $133 million for research and development. The 1999 request supports the second year of a multi-year procurement plan to build 12 ships between 1998 and 2003. The last of 57 DDG-51s is to be procured in 2004.

The DD-21 program represents a significant departure from the DDG-51 destroyer. It will be much cheaper to build and operate, with a crew of fewer than 100.

"That's a lot of engineering that has to be done," Douglass says. "In order for us to achieve those out-year savings, it's got to be a really innovative program. It can't just be a slight marginal change from the DDG-51."

DD-21 isn't the only Navy development program to be stalled. The CVX, the next-generation aircraft carrier, was to have a revolutionary hull, radically different from present-generation Nimitz-class carriers. Instead, it will first be produced with a hull similar to Nimitz, although with a revamped interior. The revolutionary hull won't appear on the CVX until the second or third carrier is produced, according to Navy officials.

To have a new hull design for the CVX by 2006, when production is to begin, would require $7 billion in development funds, more than the Navy can afford, says Rear Adm. Dennis McGinn, the Navy's director of warfare. The Navy requested $190 million for continued development of the CVX in 1999.

The Navy also has requested $125 million in advanced procurement funding for the 10th and final Nimitz-class carrier, the CVN-77, being built by Newport News Shipbuilding. Under the Navy's accelerated plan, full funding for the CVN-77 would begin in 2001, a year earlier than the schedule outline in last year's budget plan.

The Navy will continue production of the New Attack Submarine (NSSN). It has requested $2 billion for procurement of the second NSSN, along with $300 million for continued research and development. It is being produced jointly by both Newport News and Electric Boat, the result of a deal worked out with Congress last year. Navy plans call for building one NSSN per year through at least 2002, and two submarines per year by 2005. Budget constraints may preclude the service from reaching the two-subs-per-year goal.

Naval Aircraft

Navy aircraft programs are also feeling budget pressure. Last year, the Marine Corps planned to buy 425 V-22 tilt-rotor, vertical take-off and landing aircraft to replace its CH-46 and CH-53 helicopters. The Navy and Air Force each planned to buy about 50 of the aircraft as well for search and rescue and special operations. But those plans were scaled back after the Quadrennial Defense Review last year.

Under the QDR, the Pentagon's blueprint for military reform, the Marine Corps is to buy only 360 V-22s, but on an accelerated program. The Navy requested $700 million in procurement funding for seven V-22s for the Marines in 1999, along with $355 million in continued research and development funding. The Marine Corps is planning to buy 80 V-22s over the next five years for $5.8 billion. The Navy has also requested $639 million in procurement funding for the Marine LPD-17 Amphibious Transport Dock Ship, and $364 million to substantially upgrade 12 Marine Corps AV-8B Harriers over the next three years.

As part of the Navy's long-term plan to replace its aging fighter fleet, the administration has requested $3.3 billion for 30 F/A-18E/F Super Hornet fighters. The E/F version is a substantially enhanced version, with greater survivability and a higher weapons payload than the previous version, the F/A-18C/D. It is intended to become the backbone of the carrier fleet by replacing the Navy's earlier models of the F/A-18, as well as A-6E aircraft and F-14 tactical fighters.

The Navy plans to buy between 548 and 785 Super Hornets, depending on the success of the multi-service Joint Strike Fighter program, for which the Navy has requested $465 million in development funding. If the Joint Strike Fighter program runs into technical problems, schedule delays or cost overruns, the Navy may procure more Super Hornets instead.

The F/A-18E/F fighter program came under scrutiny this year after flight tests showed that the plane was unstable at certain speeds. Defense Secretary William Cohen held up funding for the program until the Navy and contractors Boeing and Northrop Grumman solved the problem.

While the so-called "wing drop" problem seems to be solved, the fighter's future is not entirely clear. Some members of Congress are beginning to raise concerns about the Pentagon's pursuit of three new fighter aircraft-the F/A-18E/F, the Air Force's F-22 fighter and the multi-service Joint Strike Fighter-at a time when the United States has no rival for air superiority.

Budget pressure and competition for scarce resources in the Defense Department and between the Pentagon and other agencies has tempered optimism that all three fighter programs will play out according to the script Pentagon planners have so carefully prepared.

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