Washington Report

Shipbuilding “Holiday” Worsens Under New Navy Budget Plan

Hamstrung by growing fiscal pressures and caps on defense spending, the Department of the Navy’s most recent long-range budget plan projects significant new reductions in Navy shipbuilding, aircraft procurement, and Marine Corps modernization throughout the fiscal year 2002 to 2007 Future-Years Defense Plan (FYDP). The new reductions, spelled out in the department’s Program Objective Memorandum-02 (POM-02), were forwarded by Secretary of the Navy Richard Danzig to the Office of the Secretary of Defense (OSD) on 5 June (Sea Power, June 2000).

"Constrained as it is by existing fiscal guidance," Danzig wrote, "this POM does not succeed in fully supporting the Navy and Marine Corps in its later years."

The POM’s projected reductions to Navy shipbuilding accounts will continue the pattern established by the Clinton administration during the 1990s and, if not reversed, will accelerate the Navy’s downslide to a fleet numbering substantially fewer vessels than the force level of 305 ships postulated in the 1997 Quadrennial Defense Review. The Navy’s executive summary to its POM submission states bluntly: "The POM-02 FYDP (FY-02 through FY-07) shipbuilding rate of 6.5 ships per year does not meet the 8.7-ship goal needed to maintain a 300-ship Navy."

According to Navy budget documents, the funding of near-term readiness continued to be the top priority in shaping the POM-02 submission. The end result was that five ships and 85 aircraft were removed from the earlier procurement projections included in the FY-2001 defense budget submitted to Congress by President Clinton just five months ago.

Acquisition “Bow Wave”

Resource-planning officials noted that it has been "extraordinarily more difficult" to develop the Navy’s future budget plan in recent months, thanks primarily to "the confluence of a number of programmatic, policy, and economic factors." Contributing to the problem was the development of a substantial acquisition "bow wave" at the end of the FYDP period generated by: (a) the procurement of a nuclear-powered aircraft carrier, in FY 2006; and (b) the start of procurement of such major platforms as the Joint Strike Fighter, the DD 21 land-attack destroyer, and the Virginia-class nuclear-powered attack submarine.

The POM-02 document protects funding for all of these critical recapitalization programs, but at the expense of other key modernization and future-readiness accounts. "Accommodating these challenges made it necessary to slow the pace of all but safety-of-flight, safety-of-ship, and near-term readiness-related modernization," Danzig’s overview to the POM-02 submission states. "It also required us to defer desperately needed recapitalization of our force and not to program future readiness requirements."

Marine Corps Trade-Offs

The Marine Corps faced similar challenges in developing its section of the Department’s POM-02 submission. "Since not everything is affordable, the trade-offs made followed DPG [Defense Planning Guidance] priorities," wrote Marine Corps Commandant Gen. James L. Jones Jr. in a 19 May letter to Danzig. Manpower accounts will be fully funded under the Marine Corps program, and increased funding is slated for the most critical needs of the Corps’ operating forces.

The Corps’ support for its top procurement program, the Advanced Amphibious Assault Vehicle (AAAV), is "unwavering," Jones asserted, even in the fiscally austere environment projected. However, several other Marine Corps acquisition programs were reduced, stretched out, or eliminated entirely because of the lack of resources.

The imperative to fund near-term readiness poses a "significant problem," according to Jones’s budget submission. "While force modernization funding in POM-02 represents a partial recovery from the meager levels of the 1990s," he wrote, "it remains insufficient to support a sustained modernization program across the FYDP.

"In the end," Jones said, "we were forced to migrate funds from modernization accounts to operational and support accounts to maintain near-term readiness."

Shipbuilding “Holiday” Criticized

The steady decline in funding for Navy shipbuilding raised renewed fears on Capitol Hill and among defense-industrial associations over the adequacy of the Clinton administration’s overall defense program.

Speaking at a 19 June seapower forum on Capitol Hill sponsored by the American Shipbuilding Association (ASA), Sen. Ted Stevens (R-Alaska), chairman of the Senate Appropriations Committee, lamented the falloff in Navy shipbuilding and called for an increase in funding to maintain the size of the fleet. "There’s no question we must increase the [defense budget] topline," Stevens said—describing a 300-ship Navy as the "absolute minimum we must afford."

Rep. Norm Dicks (D-Wash.), a senior member of the House Defense Appropriations Subcommittee, echoed Stevens’s views. "All of us should be concerned about the tremendous decline in Navy shipbuilding," Dicks said at the same forum. He described today’s Sailors and Marines as "… working three times as hard with half a fleet stretched perilously thin.

"This is not what the Navy wants to do," Dicks continued. "The TOA [total obligational authority (for the defense budget)] is inadequate."

Commenting on the Navy Department’s POM-02 submission to OSD, ASA President Cynthia L. Brown said, "It is incomprehensible that the U.S. Navy, which has repeatedly stressed the need to increase the annual shipbuilding rate to 10 ships, now recommends cuts to a program that was already woefully inadequate in sustaining a bare-minimum force level of 300 ships."

"The procurement holiday of the past eight years has set the course for a naval fleet of 250 ships or fewer," she told Sea Power. "Only through a sustained, higher rate of ship production of more than 10 ships a year will the nation be able to overcome the past decade of deficit-ship construction."

Ronald O’Rourke, a defense specialist with the Congressional Research Service, testified before Congress last spring (Sea Power, April 2000) that the Clinton administration’s amended FY 2001 Future-Years Defense Plan would fund an average of only 7.5 ships per year. If that rate were continued over a 35-year period, O’Rourke said, a fleet of approximately 263 ships would result, because during the early decades of this century the Navy will face an accelerating requirement to decommission a large number of older ships built during the 1980s.

The Navy’s current POM-02 projection calls for a shipbuilding rate of only 6.5 ships per year. Unless increased by Congress, or the next administration, that rate would significantly increase the total "deficit" in ship procurement that has accrued since FY 1993. Last spring O’Rourke testified that, during the 22 years after FY 2005, a "get-well" average of 10.2 ships per year would have to be procured to maintain a fleet of just over 300 ships.

The 30-ship deficit that O’Rourke identified last spring will grow to a 43-ship deficit under the Navy’s recent POM-02 submission, according to Brown. This would create an even higher "get-well" shipbuilding requirement beyond FY 2007, particularly if the Navy is to size its force to meet the operational requirements outlined in Clinton’s National Security Strategy for a New Century and the U.S. National Security Strategy for a New Era.

Outgoing Under Secretary of the Navy Jerry MacArthur Hultin captured the essence of the problem facing today’s Navy and Marine Corps: The demands of 80 contingencies during the past eight years have placed "enormous burdens" on Sailors and Marines, Hultin said in his remarks at the ASA forum. "Everyone feels more heavily tasked," he added. "We need more ships and aircraft, and an increase in TOA is clearly necessary to meet increased demands."

Tardy Shipbuilding Plan
Draws Mixed Reviews

The disparity between the Department of the Navy’s POM-02 submission and an updated assessment of potentially greater Navy force-structure requirements was highlighted on 26 June when the Department of Defense submitted a long-range report on Navy shipbuilding to Congress. "We have made difficult decisions in recapitalizing our Navy," wrote Secretary of Defense William S. Cohen in a cover memorandum to the report, "and crafted a naval vessel force structure which not only balances national interests, but also improves the quality of life for our Sailors and Marines."

In assessing requirements in the post-QDR environment, the DOD report—delivered to Congress nearly five months late—outlined an option for a larger fleet structured in the context of recent operations, projected deployments, and the ultimate question of risk versus affordability. "One possible option (albeit at much higher cost)," the report stated, "that is predicated upon reducing risk, is a battle force that would be sized to accomplish all likely joint and combined warfighting requirements, overseas presence, and support to contingency operations."

The future effect of an estimated 360 battle force and support ships envisioned under the "reduced risk" option would enable the Navy to maintain simultaneous aircraft carrier battle group and amphibious ready group presence in the three most critical forward-deployment hubs. According to the report, the force would include the following:

• 15 nuclear-powered aircraft carriers;

• 14 amphibious ready groups, with amphibious ships sized to meet the requirement to lift three Marine Expeditionary Brigades;

• a 10 to 15 percent increase in surface combatants;

• a 20 percent increase in nuclear-powered attack submarines;

• four nuclear-powered guided-missile submarines; and

• 14 nuclear-powered ballistic-missile submarines.

"Building such a force would take a major commitment of resources and would require pacing over 15 to 20 years," the report said. To build a force of the size projected would require funding an average build rate of 11 ships per year at an annual cost of $18 billion to $19 billion—or approximately $4 billion to $5 billion more than the funding estimated by the Navy to maintain a QDR-sized fleet of some 300 ships, the report states.

A “Clarion Call”
For Increased Shipbuilding

U.S. Senators Olympia J. Snowe (R-Maine) and Edward M. Kennedy (D-Mass.), the chair and ranking member, respectively, of the Senate Armed Services Subcommittee on Seapower, called the DOD shipbuilding report "a clarion call for stepped-up construction." In a bipartisan press release, the two said that the DOD report would provide a "valuable framework" for discussing plans for construction of the new ships required by the Navy during the next 30 years.

"As chair of the Seapower Subcommittee," Snowe said, "I will continue to question the disturbing gap between the shipbuilding requirement needed to meet our national security strategy, and the administration’s budget request. My concern stems not only from the impact of the declining number of ships on the ability of the Navy and Marine Corps to carry out their missions, but also about the negative impact the declining number of ships has in increasing demands on America’s Sailors and Marines."

"This report," Kennedy said, "confirms many of the concerns expressed by experts both inside and outside the Navy about the need to maintain an adequate naval fleet to meet our national-security requirements. We need to end the mismatch between the Navy’s equipment and personnel resources and what our Sailors and Marines are asked to do."

The tardy DOD shipbuilding report drew negative comments from other members as well. "This report is long overdue and, unfortunately, it doesn’t help us this year at all," said Sen. Charles S. Robb (D-Va.), a member of the Seapower Subcommittee.

"I have serious concerns with the shipbuilding rates in the report," Robb told Sea Power. "It doesn’t keep up the build rate of 10 ships a year that most experts say is necessary to maintain even a 300-ship fleet. And, by putting off our funding obligations to the outyears, the Navy will be forced to make some very tough choices on someone else’s watch."

The American Shipbuilding Association issued a three-page critical assessment to express its "dismay" with the DOD report and the "flawed assumptions" and unrealistic numbers contained therein. "This plan will not maintain a 300-ship Navy unless the Department of Defense is prepared to make huge investments to keep old ships operating well beyond their intended economical service life," Brown said. "This practice would, in fact, place America’s Sailors and Marines at greater risks with technologically obsolete and maintenance-intensive ships."

"It’s disappointing" Brown told Sea Power, "that DOD would rather play number games rather than be forthright with their requirements so that Congress could help restore the nation’s seapower fleet."