STATEMENT OF
THE HONORABLE JOHN W. DOUGLASS 
ASSISTANT SECRETARY OF THE NAVY
(RESEARCH, DEVELOPMENT AND ACQUISITION)
AND
VICE ADMIRAL DONALD L. PILLING, USN
DEPUTY CHIEF OF NAVAL OPERATIONS
RESOURCES, WARFARE REQUIREMENTS AND ASSESSMENTS

Mr. Chairman, distinguished members of the Subcommittee, thank you for this opportunity to discuss the Department of the Navy's submarine programs and the fiscal year 1998 budget request. It is an honor and a pleasure to appear before you. 

We are here to provide the committee with the Department of the Navy's plans to modernize and recapitalize the submarine fleet, and to present our vision and approach for preparing the Navy for the future. We will address the Navy's long term vision and strategy first, and then describe specifics of current plans and programs for fiscal year 1998.

Long Range Vision 

It is important to put our submarine acquisition program in the context of our overall shipbuilding effort. The Navy has developed a long range shipbuilding program that satisfies two overarching objectives. First, it meets the fleet force level requirements in the near term, as needed to maintain readiness by providing our Sailors with the best equipment at the most affordable price. Second, it seeks to protect to the extent possible with our limited resources, the nation's critical maritime industrial base -- shipyards, equipment suppliers, and engineering support base -- that provides us with the most modern and combat-ready Navy in the world.

To be successful in these two objectives, we must have an affordable, balanced shipbuilding program that brings together all of the major constituent interests including the Congress, the Department of Defense, the Navy research, development and acquisition communities, the warfighters, and the shipbuilding industry. To make this program more affordable, we must have a full commitment to establishing and maintaining a consistent shipbuilding program while investing in long-term affordability initiatives as a key objective in the face of limited budget levels. 

Transition Toward the Future 

As we right-size the Navy, we have decommissioned a large number of older submarines, surface combatants, amphibious ships, and aircraft carriers which has resulted in not only a smaller fleet, but a younger, more capable one. Nonetheless, the average age of the fleet is now in an upward trend, with front-line submarines, surface combatants, amphibious ships and the combat logistics force ships all showing increasing average age. This increasing fleet age underpins the ship construction program reflected in the fiscal years 1998-2003 FYDP. 

Submarine Plan Overview 

Submarines are a very important element of our overall shipbuilding plan. Our budget includes funding for the first New Attack Submarine and for the final procurement funding for SSN 23 in fiscal year 1998. The Navy is ready to proceed with New Attack Submarine construction and has requested $2.6 billion in fiscal year 1998 for the continuing design and construction of the first New Attack Submarine, and advance procurement for fiscal year 1999 and 2001 New Attack Submarines. The Navy proposes an innovative teaming arrangement with Electric Boat Corporation and Newport News Shipbuilding for procurement of four New Attack Submarines over the next five years. We need Congressional approval to enter into a contract for the four New Attack Submarines in fiscal year 1998. Use of a single contract for the four submarines is a key element of the Navy plan because it provides the business incentive for the two submarine shipbuilders to team. The contracting and teaming approaches generate substantial cost avoidance over the current plan. This acquisition strategy is affordable, executable and supports our national security requirements.

Attack Submarines 

With a crew of fewer than 150, a U.S. attack submarine deploys at high speed, unaccompanied and unnoticed, to potential trouble spots in any of the world's oceans. It remains on station, without escorts or logistic support, for months at a time as a formidable outpost for military or diplomatic purposes. The attack submarine can remain invisible, or can make its presence known, as circumstances warrant. It operates outside the glare of public attention.

On the job, submarines provide leverage far beyond their cost. The mere suspicion of enemy submarine presence forces fleet commanders to divert war-fighting ships to defensive roles. During the Cold War, for example, the Soviets, concerned for the safety of their ballistic missile submarines in light of U.S. submarine capability, decided to use a significant percentage of their attack submarines as escorts. Ultimately, the inability of the Soviets to overcome U.S. submarine superiority, despite highest priority efforts, contributed to the success of the U.S. Navy in the Cold War. 

Our attack submarines remain superior platforms for traditional roles of finding and attacking other submarines, and in attacking surface ships with superior heavyweight torpedoes. They are also ideally suited for power projection and responding to regional crises, and as an arm of foreign policy and diplomacy. 

In situations where the National Command Authorities determine that a low-visibility presence might be more appropriate than the higher profile of a traditional battlegroup, attack submarines provide the ideal option. With advanced stealth, sensor, and communication capabilities, and the ability to remain on station almost indefinitely, submarines can gather intelligence, maintain surveillance, provide early warning, interdict ships, deliver and support special operation forces, detect and lay mines -- all while remaining undetected and without subjecting either crew or ship to significant risk. With Tomahawk cruise missiles, they can conduct precision strikes on targets well inland.

Although well-suited for independent duty, attack submarines continue to play vital roles in our fast carrier battle groups. An attack submarine remains a key element in the battle group's defense against submarine attack. In addition, it brings to the battle group the capability to perform all the missions previously mentioned. Our attack submarines are generally the first ships to arrive on station, and the last to leave. Today, attack submarines make up 30% of the combatant ships of the Navy with only 7% of the personnel and 11% of the total Navy budget. 

SEAWOLF 

The SEAWOLF program began in the mid-1980's to ensure U.S. submarine superiority over Soviet counterparts well into the next century. The first U.S. attack submarine in decades designed from the keel up to accommodate the latest weapons, sensors, propulsion, and communication advancements, SEAWOLF exceeded expectations during lead ship sea trials last summer. When the first SEAWOLF joins the fleet, we will have a submarine that is unprecedented in stealth, detection, communication and weapon system capabilities. The two follow-on ships of the class are proceeding well and we are aggressively incorporating lessons learned from the lead ship.

This year's $153.4 million budget request is the final increment of funding 

required for the third SEAWOLF. Without these funds, we would not be able to complete the program.

We are continuing to monitor performance against the Congressionally mandated Cost Cap, and due to aggressive efforts to manage SEAWOLF cost, it is expected that we will be able to complete the program within that Cap. However, last year, we identified an area of expenditure regarding the termination of the fourth and follow-on ships of the class, where costs were incurred prior to the establishment of the Cost Cap. These costs were not included when the Cost Cap was initially established, as they were not included in the budget for the first three ships. The current Cost Cap language should be clarified regarding how these costs are to be treated. Last year, we proposed language to clarify this issue, and request your support this year to enact it. We may also want to exempt future SEAWOLF improvements which arise from our substantial investment in new technology from the Cost Cap. It would be wrong to forego cost effective improvements to SEAWOLF that arise from the New Attack Submarine program because of the Cap. Our current LOS ANGLES Class (SSN 688) submarines have been substantially improved over time due to ongoing research. 

New Attack Submarine 

The New Attack Submarine is the affordable successor to SEAWOLF and will replace LOS ANGELES Class (SSN 688) attack submarines as they reach the end of operational life in large numbers early in the next century. The focus for the New Attack Submarine is to capitalize on SEAWOLF technology and experience and develop a more affordable submarine that will also meet projected military requirements well into the next century. This submarine, with unprecedented flexibility and multi-mission capabilities for our Fleet Commanders, will be operationally effective across a variety of mission areas. It will retain, or improve upon, SEAWOLF acoustic and non-acoustic stealth while incorporating subsequent improvements in electronics, weapons, and propulsion. It will be smaller and cost less to build. Extensive use of commercial electronics and enhanced modular construction will provide unprecedented flexibility to incorporate new technologies as they become available.

Despite the technological sophistication of the New Attack Submarine, the aggressive implementation of acquisition reform principles has significantly reduced the cost. This is the first ship for which design, construction and planning efficiency were an integral part of the construction plan. To reduce costs without sacrificing essential capability, we have collaborated with the most knowledgeable engineers, designers, planners, production, and operational people involved in shipbuilding and component manufacture. We have involved them upfront and throughout the design process in specification reviews and have factored in their ideas for reducing design, manufacturing, operation, and maintenance costs.

Aggressive implementation of state of the art computer-aided design and construction databases, together with three-dimensional digital product modeling, have advanced the art of modular construction and greatly reduced costly iterations previously encountered in the design and construction process. Modular construction moves more of the manufacturing work from inside the enclosed pressure hull, to shops which can be more productive and where the individual jobs will provide for fewer disruptions during production. These modular construction techniques, coupled with extensive use of open system electronic architecture and commercial electronics, provide unprecedented flexibility to insert new technologies into this submarine when they become available. Readiness to proceed with construction was reviewed and approved by the Under Secretary of Defense for Acquisition and Technology in January 1997. Authorization of the first New Attack Submarine in fiscal year 1998 is one the Navy's top priorities.

New Attack Submarine Acquisition Plan 

In February 1995, the Department of Defense approved the Navy plan to allocate the early New Attack Submarines to Electric Boat. The purpose of this proposed allocation was to capitalize on Electric Boat's extensive submarine design and construction experience and to minimize the cost of low-rate submarine production while maintaining a nuclear capability at two shipbuilders - carriers at Newport News Shipbuilding, and submarines at Electric Boat. This plan provided for the lowest cost to the government, by having only one shipbuilder facilitized for construction of submarines and a single learning curve for submarine construction.

The fiscal year 1996 National Defense Authorization Act directed the Secretary of Defense to provide a plan that would alternate contract awards for the first four submarines between Electric Boat and Newport News Shipbuilding, then compete solely on price for the serial production of the fifth and subsequent ships. The plan the Secretary of Defense submitted to the Congress in March of last year, for fiscal year 1997, included funding for two of the four submarines and concluded that it would be very difficult to accelerate funding for the program in the context of other modernization priorities. 

We faced these same difficulties in preparing the fiscal year 1998 budget request and Future Years Defense Program. Given the need to fund other high priority shipbuilding programs including, a replacement aircraft carrier, the DDG 51 multi-year procurement, and LPD 17 SAN ANTONIO class amphibious ships, we have modified the NSSN plan to procure the first four NSSNs over five years. 

New Attack Submarine Construction Plan 

In December 1996, Electric Boat and Newport News Shipbuilding proposed to construct New Attack Submarines as a team, rather than as competitors. This would be consistent with the Congressional direction to involve both nuclear submarine shipbuilders; to foster cooperation between the shipbuilders on both construction and design improvement integration; and to facilitate the cross pollination of knowledge and the insertion of advanced technologies. In February 1997, both shipbuilders outlined the details of their proposed teaming arrangement for construction in a written agreement that includes specific details of general and specific contractual arrangements, proprietary rights, dispute resolution and representation. Both shipbuilders would use Electric Boat's digital design database to construct New Attack Submarines and each shipbuilder would specialize in certain assemblies, thereby approaching single learning curve efficiencies. This will also allow for a continuous, low building rate of individual modules - thus maintaining trades skill in an efficient manner. Completed modules would be exchanged by barge between the construction facilities at Quonset Point, Rhode Island; Groton, Connecticut; and Newport News, Virginia. Both shipbuilders would complete construction and testing of alternating submarines, with Electric Boat delivering the lead fiscal year 1998 submarine in the summer of 2004.

Teaming has been used successfully in many other Department of Defense programs including the Javelin Advanced Anti-Tank Weapon System, Comanche (RAH-66) Light Helicopter, Osprey (V-22) Joint Advanced Vertical Lift Aircraft, Hornet (F/A-18E/F) Strike Fighter and Standard Missile (SM-2). These programs have proportional work share arrangements similar to that proposed by the Electric Boat and Newport News teaming agreement. In each case teaming has resulted in cost avoidance to the government, by letting industry optimize its facilities and production processes. 

The teaming agreement calls for Electric Boat to act as a prime contractor to the government, with Newport News assuming a major sub-contractor relationship. This simplifies the business relationship - and establishes the means for savings to be realized. It does not establish a single source environment, but a rational approach to sustaining a very low rate production of submarines, which are projected for the future. 

Teaming will allow each shipbuilder to specialize on specific sections of the submarine - focusing attention on ways to improve production and technology integration efforts. New innovation will not be stifled, but encouraged as more open lines of information exchange are developed between the two shipbuilders, and between the shipbuilder team and government. The teaming agreement has specific provisions to enhance and upgrade future New Attack Submarines - these efforts may be joint or developed individually by the shipbuilders. Our process is designed to allow industry and the shipbuilders to compete for research and development funds based on innovative ideas for improving capability, producibility and affordability.

Based on this innovative teaming approach, the President's Budget for fiscal year 1998 and FYDP fully funds the procurement of four submarines. Because the FYDP also fully funds the construction of a nuclear carrier at Newport News Shipbuilding, the two shipyards have agreed in principle that the work share for each of the four New Attack Submarines can be divided so that both remain viable nuclear submarine builders.

Execution of this plan requires significant change in current law-specifically repealing the requirement for initial allocation followed by competition between the two shipbuilders. Additionally, your authorization in fiscal year 1998 for the Navy to have a single contract for these four ships is vital to the success of the Navy's acquisition strategy and the teaming arrangement between the two shipbuilders. It provides the incentive to Electric Boat and Newport News to maintain a viable agreement, while ensuring long term program stability. We respectfully request your support for first ship authorization, the funding in the President's Budget Request, repeal of the allocation and competition requirements in existing law, and authorization to use a single contract for the first four ships. 

Submarine Technology 

The New Attack Submarine was designed to provide a capable, technologically robust warship at an affordable price. The baseline, lead ship New Attack Submarine satisfies all its military requirements and incorporates many technology advances. It is important to recognize that incorporation of future technologies into the New Attack Submarine platform will be made feasible as a result of our solidly established "design-build" processes and new technology management approach process. The extensive use of computer-aided design and engineering tools permitted the Navy to incorporate state-of-the art technologies into the baseline design, while designing sufficient flexibility into the ship necessary to permit the insertion of additional new technologies that may be developed in the future.

The Navy continues to be fully committed to the insertion of advanced technologies to further enhance the affordability and capability reflected in the New Attack Submarine baseline. This is a continuation of the Department's technology strategy begun last year at the urging of this Committee to execute a steady, moderate level of investment. The Congress strongly supported this approach by appropriating an additional $60M in fiscal year 1997 to accelerate the pursuit of selected technologies. The Navy's fiscal year 1998 budget request continues this level of submarine technology funding and we would hope that Congress will continue to support the Navy's efforts with this year's budget request. 

Again, based on recommendations from this Committee, major revisions to the Department's submarine technology management processes have been put into place. The benefits of these processes are beginning to be realized. I have appointed a flag officer in the Naval Sea Systems Command to be the focal point and to orchestrate management of all advanced submarine R&D efforts. 

Working with our industry partners, this Committee, and an independent panel of technology experts, we conducted a major review of all submarine technology programs and developed an overall roadmap for technology investment. Most importantly, we established four focus areas to become the fundamental objectives by which we guide our technology investments. These include stealth, sensor and processors, connectivity (C4I), and payloads. Inherent within all the focus areas is our commitment to affordability by pursuing technologies which will reduce submarine design, construction, and life cycle costs. These focus areas have enabled us to benchmark all of our programs to achieve a balanced investment for further substantial gains in submarine military performance and affordability. In the near term, we will focus on technologies that will continue to enhance New Attack Submarine performance in the littorals. This includes technologies addressing sensors and processors, connectivity and payload. For the far term, our focus will be to maintain our undersea dominance which will require revolutionary improvements in stealth.

We are also aggressively developing a program to construct a new large scale test vehicle, for which Congress provided funding of $50M last year. The Large Scale Vehicle is an essential part of testing developmental technologies offering potential revolutionary improvement to stealth. As with the New Attack Submarine program, Newport News and Electric Boat have reached a teaming agreement for the conceptual design and construction of this project. We have established a joint Navy-industry program management team, and expect to award a three-year design and construction contract this summer.

We strongly urge the Congress to continue support for Navy submarine technology efforts. Our fiscal year 1998 budget requests $60M to continue this approach. We have the management team and the right strategy in place to move ahead aggressively to sustain our lead in submarine warfare.

Conclusion 

In summary, we believe that the Department of the Navy's request for fiscal year 1998, and our vision and approach for recapitalization in the outyears, will meet our two overarching objectives to satisfy submarine and surface combatant force level requirements needed by our Navy-Marine Corps team, while simultaneously protecting to the degree that we can, the nation's critical and fragile shipbuilding industrial base. 

The Navy's submarine program is designed to satisfy a broad spectrum of regional and littoral mission requirements while retaining blue-water undersea battlespace dominance. With added emphasis on expeditionary warfare in the littoral environment, the New Attack Submarine is designed to surpass the warfighting and peacetime performance of any current or projected threat submarine. The ship will have significantly improved electromagnetic stealth, sophisticated surveillance capabilities, onboard and towed acoustic sensors which provide nearly instantaneous target ranging, special warfare enhancements, highly capable mine reconnaissance system and will provide for SEAWOLF level quieting in a more affordable submarine. New Attack Submarine will be able to launch all advanced-capability heavy-weight torpedoes, cruise missiles, and mines in the present and planned inventory. Special Operations Forces capabilities have been incorporated into the ship's design from the start. Covert launch and recovery of forces are supported by an integral lock-in/lock-out chamber and/or swimmer delivery vehicles, including the Advanced SEAL Delivery System.

We urge this Committee to approve our plan and also support the Navy's requirements for submarine research and development and construction. These items are critical to developing and executing our long-term recapitalization plans for the Navy's transition into the 21st Century. By working together, we can ensure that we provide the Sailors of tomorrow's submarine fleet with affordable systems that can overcome whatever challenges to our national security the future may bring.