Charting a Cautious Course

wo trends are shaping up to define the Navy's future: an increasing number and variety of military threats, and a decreasing number of ships and shipbuilders to respond to those threats. It's a combination that worries service leaders.

Shipbuilding has fallen to its lowest rate since 1939. Because the Navy retires ships faster than it is now building them, service leaders are concerned the fleet may soon drop below 300 ships, the absolute minimum they say they need to handle today's military missions. By the end of this year, the Navy expects to have 315 ships in the water, down from 550 just 10 years ago.

"The Navy is working to maintain its multimission capabilities and forward-presence posture while reducing the size of the fleet. But shrinkage does not translate to readiness," said H. Lee Buchanan, assistant secretary of the Navy for research, development and acquisition, testifying in April before the Senate Armed Services Committee panel on emerging threats and capabilities.

If the Navy and Marine Corps are to navigate successfully in this new environment, they will have to exploit emerging technologies in new and better ways to both counter enemy threats and reduce the service's own operating costs.

"If we do not lead the technological revolution, we will be vulnerable to it," Buchanan said. "The superior technology we enjoy today rests on a foundation of basic research laid years ago."

Smarter Ships

If the Navy is to maintain its ability to respond to threats with a smaller fleet and a limited budget, it will have to cut operating costs in both its sea fleet and its air fleet.

Compounding the situation is the fact that much of the Navy's ship and aircraft assets are nearing the end of their intended life spans, and therefore incurring higher maintenance and operating costs to sustain them at sufficient levels of military readiness. To begin tackling the high operating costs, or total ownership costs, Navy managers across the service are developing better finance and accounting tools to more accurately measure costs for all aspects of sustaining weapons systems, from repairs, fuel and spare parts to infrastructure and personnel costs associated with maintaining and operating the equipment.

Under the rubric of "affordable readiness," the Naval Air Systems Command in 1996 instituted a comprehensive program to lower weapons costs from the early stages of research and development through deactivation and retirement. Managers are required to continuously seek ways to reduce life-cycle support costs and reinvest savings in naval aviation modernization and recapitalization programs.

Over the last two years, NAVAIR has invested about $148 million in staff-generated proposals for cutting total ownership costs of weapons systems. The investment is expected to yield long-term savings of more than $1 billion over the next 10 years, according to NAVAIR's 1998 annual report.

The Navy is also continuing its "smart ship" program, where it is using the USS Yorktown as a platform to test new technologies that will reduce personnel and maintenance requirements on ships. Once proven, the technologies are then retrofitted on other ships to achieve broad savings across the fleet.

Under the program, the Navy plans to spend $36.7 million to buy and install upgraded systems on three DDG-51 Arleigh Burke-class destroyers and four CG-47 Ticonderoga-class cruisers in its 2000 budget. The upgrades include an integrated bridge system to assist in digital piloting and collision avoidance and an integrated monitoring system that automates maintenance for propulsion and auxiliary equipment. Over the next six years, the service anticipates spending $600 million on the program, Buchanan said.

"The implementation [of the upgraded systems] is critical to reducing overall life-cycle cost and at-sea manning requirements," he said.

Ship Programs

The DDG-51 Arleigh Burke-class guided- missile destroyer is the largest Navy ship program. The ship's combat system is centered around the Aegis Weapon System and will provide future land-attack capability as well as area-wide defense against ballistic and overland cruise missiles. Next year the Navy will spend nearly $3 billion for three new DDG-51 destroyers and continued research and development. Under a multiyear procurement agreement with shipbuilders Bath Iron Works and Ingalls Shipbuilding, the Navy plans to buy at least three new ships each year through 2003, and possibly a fourth in 2001. Eventually, the class will total 57 ships.

The Navy is also continuing development of the DD-21, a new class of surface combatant that will support joint-service requirements along seashores. The DD-21 will have an array of land-attack weapons to provide sustained, distributed and precise firepower at long ranges in support of forces ashore.

The Navy is making the most of the shrinking shipbuilding industry by requiring Bath Iron Works and Ingalls Shipbuilding to head competing development teams for the DD-21 contract. When the Navy first sought bidders for the program, Bath and Ingalls joined with defense giant Lockheed Martin to bid for the project, essentially scaring off any other would-be bidders. After the Navy revised its request for proposals to force a competition, Bath teamed with Lockheed and Ingalls with Raytheon Systems. While the teams will compete for design of the future combatant, both will receive contracts to build the winning design.

The Navy also is building its ninth Nimitz-class carrier, the Ronald Reagan (CVN-76), scheduled for delivery in 2002. It plans to begin funding in 2000 what it terms an "evolutionary" aircraft carrier acquisition strategy with CVN-77, the 10^th and final Nimitz-class carrier, slated to replace the Kitty Hawk (CV-63) in 2008. The Navy will spend $750 million in advanced-procurement funding for CVN-77 next year to begin building nuclear components and will request full funding for the carrier, $3.95 billion, in 2001. Virginia-based Newport News Shipbuilding is the only carrier builder in the country right now.

Using CVN-77 as a platform for new technologies meant to enhance warfighting, foster flexibility and reduce the cost of operating the carrier over its lifetime, the Navy will sow the seeds for CVX, a next-generation aircraft carrier still on the drawing board. While the first ship in the CVX class will be similar to CVN-77, later ships may be substantially different, and even incorporate a new hull design.

"The primary thrust for reducing [total ownership costs] will be to reduce workload requirements so that carrier onboard manning can be significantly reduced. Achieving [the CVX] vision and [total ownership cost] reductions will require significant design changes and incorporating technology advances that have become available since the Nimitz class was designed over 30 years ago," Buchanan said.

The Navy also will continue production of the New Attack Submarine. The administration's budget request for 2000 includes $749 million for advanced procurement of nuclear components of the third sub, as well as $357 million for research and development. As a result of a deal worked out in Congress in 1997, the sub is being built jointly by Newport News and General Dynamics' Electric Boat division.

The Marine Corps will get a boost as the Navy will also spend $1.5 billion to purchase the third and fourth ships in a new class of amphibious transports, the LPD-17. Eventually the Navy plans to buy 12 ships-two per year through 2004-to meet the lift requirements of the Marines.

Naval Air Fleet

The Marines also will see 10 new tilt-rotor, vertical-takeoff V-22 Osprey aircraft next year, under a $986 million procurement plan. The Navy will continue research and development funding at $183 million for the program, which is still in the engineering and manufacturing and development phase. The aircraft, which can carry 24 combat-equipped Marines or a 10,000-pound external load and can deploy for 2,100 nautical miles with a single aerial refueling, is deemed critical for the Marines' expeditionary mission.

The single largest program in the Navy's procurement budget is the F/A-18E/F Super Hornet tactical fighter, which concluded its three-year engineering and manufacturing development phase in May. Next year the Navy plans to spend more than $3 billion for 36 new fighters, continued research and development, and initial spares. With greater survivability and a higher weapons payload, the jet is a substantially enhanced version of its predecessor, the F/A-18C/D, and over time is intended to replace earlier models of the F/A-18, as well as A-6E aircraft and F-14 tactical fighters.

The Navy has proposed a six-year procurement that would allow the service to buy 222 fighters for the cost of 200. Eventually, the Navy plans to buy at least 548 of the enhanced tactical aircraft, and possibly as many as 785, if the next-generation Joint Strike Fighter program, being pursued jointly by the Navy, Marine Corps and the Air Force, slips or encounters technical problems. The first Joint Strike Fighter isn't expected to be delivered until 2008.

Navy and Air Force tactical air programs, which eventually are expected to total more than $350 billion, have come under increasing scrutiny in recent years, as budget pressures have forced the Pentagon to rethink its spending priorities. All three programs are on track for the time being, but congressional support over the next two years will be critical to their futures.