Congressional action on defense could be influenced significantly this year by the Quadrennial Defense Review (QDR)-the follow-on study to the 1993 Bottom-Up Review, which shaped defense priorities and budgets during President Bill Clinton's first term. Due to be completed in mid-May, the QDR could reshape defense spending in 1998 and beyond, depending on its conclusions and the strength of support for the conclusions by military leaders.
For example, Perry's successor, former Republican Senator William Cohen, said in late February that the QDR could justify spending less on modernization than the $60 billion a year by 2001, the goal set by the Joint Chiefs of Staff two years ago. If so, some of the handwringing in Congress over the 1998 request could ease by summer when the defense budget is marked up by the oversight committees. That would please the administration, said one outside analyst. The White House, he said, "is betting on the come that the world will be a safer place in the next century. If they're right, they'll save a hell of a lot of money; if they're wrong, we'll have a very big problem."
While many of Cohen's views on future defense budgets are still to be revealed, the 105th Congress looks a lot like the 104th on defense issues. Republicans are still in charge and focused on many of the same Navy programs as last year. Topping the list is shipbuilding.
The administration has "pushed what they say we need to do as a country off to the next President," said Representative Duncan Hunter (R-CA), Chairman of the House National Security Subcommittee on Procurement. At a hearing on shipbuilding in late February this year, Hunter told John W. Douglass, Assistant Secretary of the Navy for Research, Development and Acquisition, "You and I know we can't create that giant bow wave [of deferred shipbuilding] and expect some other President to be politically able to [correct it]. We have an enormous problem."
Representative Curt Weldon (R-PA), Chairman of the Military Research and Development Subcommittee, referred to "a terrible mismatch" between future threats and current defense budgets. Billions of dollars required for timely replacement of destroyers, submarines, aircraft carriers, and tactical aircraft are missing from the five-year defense plan, Weldon said. "When you realize they've pushed them all into the out-years," he said, "it isn't going to work."
Representative Ike Skelton (D-MO) agreed. "It does appear we have a military budget-cut binge. . . . I can see us slipping back, unwittingly, to the 1920s, 1930s, where we will have very little capability against [our] threats."
During Navy posture hearings in February, Senator Strom Thurmond (R-SC), Chairman of the Senate Armed Services Committee, reminded Navy Secretary John Dalton of his testimony a year previously that the Navy needed $28.5 billion in annual procurement to sustain and modernize its fleet. The Navy's 1998 budget is $19.8 billion short by a third. "Modernization," said Thurmond, "continues to pay the biggest price for budget inadequacies."
Navy officials concede that budget priorities haven't changed the way Perry suggested they would. The money isn't there both to keep readiness high and to fund a robust procurement plan. "We are budgeting to cover readiness, quality of life and procurement, in that order," said a senior official. In tight budget times, he asked, "how can we modernize without destroying readiness? That's the challenge."
During internal negotiations on the 1998 budget, the Navy cut to 20 the number of Super Hornet fighter/attack aircraft (F/A-18E&Fs) it would buy in 1998four fewer than projected earlier. Funding for a second LPD-17 amphibious transport, to replace the LPD-4, was delayed until 1999.
The Marine Corps requested $100 million less for procurement than it had projected last year for 1998. "Most of that money," said a senior Corps official, "got realigned into operations." The Corps' ammunition account is only $99 million, down from $132 million in 1997. "Our budget, like the Navy's and the Defense Department's, anticipates things getting better in '99 and out," he said. "Modernization and investment are lower than we'd like but that's the balance we had to strike."
Military leaders usually feel obligated to defend their budget once approved by the White House. "The shipbuilding program is robust and on track," said a senior Navy officer, reviewing the details. "We've turned the corner." Spending on weapons programs would drop by 2.7% in 1998, he said. "After that it levels off to about 1% real program decline. That's not bad."
Maintaining the Industrial Base
Yet even in public testimony, the concern comes through. John Douglass took pains to couch his worries in terms of the U.S. maritime industry base, rather than suggest future defense needs are being neglected. "There are not enough ships in this plan to sustain the six shipyards now producing capital Navy ships," he told the House Procurement Subcommittee. "I don't see how we're going to get through this period and maintain the maritime industrial base . . That's of great concern to me."
Douglass noted that in 1991, his predecessor oversaw construction of 135 ships. "Today I have less than 39.... If things don't change, somebody sitting in this spot five years from now will be down to the mid- to low-20s."
Still, Douglass defended the shipbuilding plan by focusing on how it meets near-term requirements. "We can cover the Navy's core needs with the program we have," he said. Asked by Representative Skelton how to stop an apparent slide toward a 220-ship fleet, Douglass chose his words carefully: "The six-year shipbuilding program that the Navy has brought forward," he said, "meets the Navy's needs during the six-year period that it covers."
And after 2003?
"Then," said Douglass, "we are going to have to produce [ships] at substantially higher rates than we've been producing ships now. That's why I'm concerned about maintaining the industrial base."
The administration's budget plan through 2003 has $40 billion for ship construction. In the decade following, it will need up to $250 billion, Douglass said. Navy leaders can't explain precisely where that money will be found. Fingers are crossed that many billions of dollars can be freed by reducing infrastructure and using innovative technology to lower crew sizes on board ship.
Ronald O'Rourke, a senior defense analyst with the Congressional Research Service, told House committee members that the "most striking thing" about Navy's shipbuilding plan "is the lack of an apparent uplift trend" even as it moves toward 2003. "The rate is stable at five to six ships per year." By contrast, aircraft procurement is rising "to a much higher level by the end of the [Five-Year Defense Plan]," he said.
For every year the Navy fails to build nine to ten ships, he said, "we are adding to an approaching shipbuilding bow wave, a deferred shipbuilding requirement that is going to crest over us about 15 years from now." About the time the wave hits, O'Rourke said, "the Navy and the Nation might be confronted with a large modern Chinese fleet, a rejuvenated Russian Navy, and significantly improved maritime military capability in other nations such as Iran."
For all the tough words Republicans fired at the Navy's budget, their own goal of a balanced budget by 2002 prevents them from spending a whole lot more. The Republican-led Congress did bump up Clinton's last two defense budgets and seems ready to do so again. By one estimate, $6.8 billion could be added to the $250.7 billion request, but by April it was still unclear what part of any increase might go to Navy programs. Topping the Navy's `wish list' if more money becomes available is $375 million to raise the F/A-18 buy to 24. Halfway down the 25-item list is $746 million to move the second LPD-17 again into 1998.
More intriguing for shipbuilding advocates was wish-list item number eight: $720 million to buy four, not three, Arleigh Burke-class destroyers in 1998, possibly an attractive option for Congress as well. With last year's award of the LPD-17 program to the team of Avondale Shipyards Division, Louisiana, and Bath Iron Works, Maine, Navy officials are reconsidering an earlier decision to allocate the 12-ship DDG-51 buy over the next four years equally between Bath and Ingalls Shipbuilding of Pascagoula, Mississippi, home state of Senate Majority Leader Trent Lott.
Navy officials are said to be worried Ingalls might not have enough work to stay open. But if the Navy cut Bath's allocation to five ships or even four, it would be seen as penalizing Bath for winning the LPD-17 competition. Adding a fourth destroyer in 1998 would raise the four-year DDG-51 buy to 13 ships, giving some color to an anemic shipbuilding program-and satisfying two shipyards and at least one powerful Mississippi lawmaker.
But O'Rourke warned lawmakers that "an add-on of one or two ships per year will not resolve" the shipbuilding problem. To keep a 330-ship fleet, he said, the ideal shipbuilding rate is three-and-a-half to four surface combatants plus two attack submarines each year. The administration, through 2003, supports fewer than three surface ships a year and one submarine a year.
During a break in his testimony, O'Rourke compared the Navy shipbuilding plan to a airplane flying toward the side of a mountain. "The longer you wait to pull up," he said, "the steeper your rate of climb must be. And you may find your plane can't climb at such a rate."
Key House lawmakers are wary not only that budgets are too tight but that design and procurement strategies are flawed for building the New Attack Submarine (NSSN). Douglass, a retired Air Force brigadier general and now the Navy's top acquisition executive, faced his toughest grilling on NSSN on 18 March before Hunter's procurement subcommittee. The Navy originally had wanted one contractor, General Dynamic's Electric Boat Division, Groton, Connecticut, to build the entire class. Hunter and House colleagues, interested in competition and an aggressive program of technology upgrades, led an effort last year to force the Navy to divide the work between Electric Boat and Newport News Shipbuilding in Virginia.
Current law dictates that each yard build two of the first four NSSNs, following a specific schedule for developing and inserting new technology. A single winner would be selected to build the remainder of the NSSN class. But in preparing the 1998 budget, the Navy surprised Congress with a dramatically different proposal: have Electric Boat and Newport News Shipbuilding jointly build each NSSN. In other words, ignore Hunter's contention that competition is needed for U.S. submarines to keep their technological edge.
From the Navy's perspective," said one informed source, "the whole debate over NSSN had gotten out of its control." With teaming, the Navy would regain control and be able to fully fund the first four NSSNs in its Five-Year Defense Program.
"It won't bother the Senate very much; it will bother the House," predicted one analyst. For the two yards, teaming means they can fight together for submarines, against other procurement priorities, rather than fight one another, he said.
The Navy said teaming would lower the cost of the first four submarines by as much as $650 million, money that would be used for other shipbuilding. With each yard building the same sections of the submarine over and over again, "we will avoid the learning-curve costs," said a senior Navy official.
Hunter was incredulous and angry.
"I just want to remind you," he told Douglass, "that in the House-Senate conference last year we hammered out what we were going to do with subs.... That conference was attended by the Speaker of the House, the now leader of the Senate, the Secretary of the Navy, the CNO [Chief of Naval Operations], the Comptroller for DoD . . . . Then it was signed by the President." After all that, Hunter continued, the Navy negotiates with the shipyards on teaming, then announces "they're not going to compete. Only in America," he said, shaking his head.
Eliminating competition, he said, can only mean higher costs. Hunter described teaming this way: "Instead of you or me having to lose 100 pounds apiece, and race for all the marbles in a 100-yard dash. . . we put our arms around each other, stroll toward the finish line and say we're going to split the winnings." If competition is abandoned, he warned, "I'm not sure I see the need to incur the extra expense to keep both yards in the submarine-producing business."
In response, Douglass suggested Hunter's plan made even less sense. "If you go for winner-take-all. [after four boats] what are you really accomplishing?. . . How are you going to maintain the boats of the loser?" Teaming, on the other hand, "maintains the industrial base in two places [and] gets the fourship buy to be affordable.... Those are good things for both industry and us."
Douglass conceded that Navy leaders agreed to the NSSN compromise last year, but that didn't mean they supported it, he said. "There was no meeting of the minds," he told Hunter. "We tried to say [then] that we did not have the money."
Hunter forced Douglass, along with Vice Admiral Donald L. Pilling, Deputy Chief of Naval Operations for Resources, Requirements and Assessments, to testify shoulder-to-shoulder with four of the NSSN program's harshest critics-analysts and scholars who had advised Hunter last year on competition for the submarine contract and establishment of a rigid schedule for technology insertion. Predictably, the sparks flew.
John S. Foster, a physicist and Director of Defense Research and Engineering at the Pentagon during the 1970s, proposed that the Navy support a design competition for another advanced attack submarine, one half as expensive as NSSN and with a crew of fewer than 40. Douglass said the Navy did not have the money.
Lowell Wood, a scientist and visiting fellow at the Hoover Institute, Stanford University, California, called the proposed Electric Boat-Newport News team a "cartel" and testified that the current NSSN design is so inferior that "great admirals of America's past . . . would unhesitatingly prefer dereliction-of-duty charges against those Navy officers" involved. Douglass called Wood's charge "scandalous at best and shameless at worst."
NSSN's design "is the best the Navy is willing to do, not the best it can do," said Anthony Batista, a defense consultant and former professional staff member of the House Armed Services Committee. Batista said Russian submarines are faster, quieter, and deeper-diving than the NSSN. For the Navy to claim superiority over Russian submarines, he said, is tantamount to "O.J. Simpson saying he had no Bruno Magli shoes."
Writer and naval analyst Norman Polmar said teaming Electric Boat and Newport News "defeats innovation... We lose the opportunity to push the envelope in submarine design and construction. Each of the four NSSNs will be basically the same, like peas in a pod."
Douglass said he didn't agree with Hunter's "experts." U.S. submarines remain superior, overall, to the Russian fleet, and NSSN will protect that lead. He advised the subcommittee to look at NSSN not by comparing "individual attributes" to Russian submarines but "from a holistic" point of view. Douglass also noted more than once that he and Admiral Pilling were out-numbered by opposition witnesses. When the hearing ended almost six hours later, egos were bruised, and the Navy's teaming plan appeared to be in some trouble.
The Senate, however, is more satisfied than the House with the NSSN design and was expected to be more favorably disposed to the teaming plan, too. With Cohen's retirement, Senator John Warner (R-VA) chairs the Senate Seapower Subcommittee-and he might take exception to characterizing Newport News Shipbuilding and Dry Dock Company as half of a "cartel."
House Democrat Skelton came away from shipbuilding hearings less skeptical of the NSSN than the Navy's proposal to build an Arsenal Ship. The 1998 budget seeks $159 million to begin developing an Arsenal Ship demonstrator under a streamlined procurement process. One third of the cost would be paid by the Defense Advanced Research Projects Agency.
The Arsenal Ship would be a floating magazine of up to 500 missiles with a small crew and smaller radar signature. It could bring enormous firepower to a region and remain on station for months at a time, proponents contend.
"This does not seem like it is a very good idea," said Skelton. "At best it would be a sitting duck." The same mission, he said, "could be accomplished by one of our new attack submarine designs. . . . an underwater arsenal ship which is defensible, cost-effective, and costs much less than the so-called Arsenal Ship."
Hunter questioned whether the Navy could afford to put hundreds of missiles aboard a ship even if the concept had merit. "We don't have enough money in the budget to give Marines the number of M- 16 rounds they need," he said. "Our carriers can't put planes on all the decks. And this ship is going to carry, what, a billion dollars worth of ordnance?"
Analyst O'Rourke said lawmakers might want to consider other alternatives like forward deployment of existing missile ships so they can respond more quickly to regional threats, or insertion of a large missile-firing capability in future surface combatants, including a few Arleigh Burke-class destroyers.
Douglass, however, said the real advantage of Arsenal Ship is that it can deliver a lot of firepower for relatively little cost. "With a crew of less than 30," he said, "ownership costs over a 20- or 30-year period are substantially below all of these other options."
The Navy last year narrowed the design competition to three contractor teams. Douglass said one team even proposes no crew on Arsenal Ship, which could greatly enhance survivability. "You get people off, and you can do an amazing amount of things to keep that baby floating," he said.
Pressed by Skelton, Pilling admitted the ship would not satisfy some "new core need." Its effectiveness, he said, "is not the number of tubes bought, but its pre-position strike capability, made available to [regional commanders] 365 days a year."
The Navy's budget also asks for $55 million to begin development of SC-21, the Surface Combatant for the 21st Century. Curt Weldon found the tie between Arsenal Ship and SC-21 to be unclear. He warned against the Navy moving down an unaffordable path with separate futuristic shipbuilding programs. But Douglass said that Arsenal Ship is "a major stepping stone into SC-21.... It might be we'd want to finish the buy of DDG-5 Is, buy five or six Arsenal Ships, and go to SC-21."
SC-21, he said, will have one-third the crew of an Arleigh Burke-class destroyer. "It will be a revolution in the way Navy ships are manned.... Every sailor we take off the current Aegis generation of ship, I save $800,000 in life-cycle cost."
This could be the year Congress kills one of the services' prized tactical aviation programs. Both the General Accounting Office (GAO) and Congressional Budget Office warn the nation cannot afford to build the Air Force F-22s, the Navy F/A-18E/Fs, and the Joint Strike Fighter. Annual costs from all three are projected to reach $14 billion to $17 billion a year in several years, versus only $2.8 billion this year.
The Navy wants to ramp up its buy of F/A-18s to 50 a year from an average of 24 per year through 2003. "We're high on this airplane. We think it's the right airplane. It's already flying and doing quite well," said a senior Navy official.
Indeed, the higher-priced F-22 seemed to be at greater risk at press time. Sam Nunn, a powerful advocate for F-22, retired from the Senate in January. One pro-Navy scenario has Congress soon forcing the Air Force to buy Super Hornets, killing the F-22, and applying that program's R&D to the Joint Strike Fighter.
But in 1996 GAO said that the Super Hornet provided only a marginal gain in performance for a significant increase in price. Congress just might decide to trim all three aircraft programs. Cut and compromise, after all, seem to define the current budget climate.
"We have a saying," said a senior Navy official. "It goes, `An average year is worse than last year but better than next year.' When you're on that downward cycle, it's kind of like that."