FEATURE ARTICLE

January 2007

Shipbuilding Plan Sailing Into Turbulent Seas

By Sandra I. Erwin

Cutbacks in personnel, training and maintenance costs will fuel a moderate growth in Navy procurement programs starting in 2008, albeit at a slower pace than Navy leaders had forecast a year ago, analysts estimate.

The Navy had projected its 2007 budget of $127 billion would increase by 18 percent in 2008, but that is most probably “not achievable” unless the service trims more people from the force and slashes spending on weapon maintenance and operations, says James A. McAleese, defense industry analyst and attorney at McAleese & Associates.

Procurement spending of about $30 billion in 2007 was forecast to soar by 28 percent in 2008. But that is most certainly not going to happen, he adds. “The Navy cannot likely achieve currently planned procurement, even if it freezes both personnel and operations costs.

“However, the Navy can credibly achieve $12 billion to $14 billion a year in shipbuilding, plus $10 billion to $12 billion a year in aircraft procurement,” McAleese predicts.

On the aviation side, the Navy is almost guaranteed to secure funding for the F/A-18E/F Super Hornet, the Marine Corps’ V-22 Osprey, the MH-60R helicopter and the P-8A anti-submarine patrol aircraft, says McAleese. One program potentially on the chopping block is the broad area maritime surveillance unmanned aircraft.

The Navy has committed to funding an average of $14.4 billion a year for new ship construction in order to boost the size of the fleet from 280 to 313 during the next three decades.

Congressional budget analysts, meanwhile, assert that the 313 ship plan requires far more funding — $16 billion to $19 billion.

According to McAleese, “any increases significantly beyond $14 billion a year should be difficult to achieve,” particularly between 2008 and 2010, when the Navy is slated to buy a new aircraft carrier. The carrier alone requires more than $10 billion over those three years. In those years when the carrier is funded, the Navy, realistically, will be “lucky” to afford $10 billion a year for other ships, he says.

McAleese notes that the political environment for shipbuilding has improved substantially with Democrats in charge of Congress. All indications are that lawmakers on the defense authorization and appropriations committees will support increases to the shipbuilding account, he says.

One of the winners of the shipbuilding budget will be the new Zumwalt-class destroyer, the DDG-1000, McAleese says. The Navy is expected to spend nearly $27 billion on the program, at roughly $3 billion to $4 billion a year.

The Navy plans to award two construction contracts this month — one to General Dynamics and one to Northrop Grumman — for the first two ships of the class, says Rear Adm. Charles Hamilton, the program executive officer.

Hamilton says he is optimistic that the Navy has a “balanced” shipbuilding plan and that Congress will support it. Despite all the “drama” that shipbuilding generates on Capitol Hill, in 2007, “we got more ships than we asked for,” Hamilton says at a recent conference hosted by the Surface Navy Association.

The Zumwalt class will be relatively small at seven ships. But each ship will contain technologies — in the form of sensors, weapons and propulsion systems — that will be far more advanced than any other vessel has ever seen, Hamilton says. The ship’s high price tag, of about $3 billion each, forced the Navy to downsize the quantity of the buy and also prompted a redesign of the vessel so it can be built at $2.2 billion.

A smaller combatant, the littoral combat ship, or LCS, will be produced in much larger numbers and will become the workhorse of the surface fleet. (See related story)

The Navy so far has purchased four LCS ships — two are high-speed monohull vessels and two are trimarans. The program has been on a “rollercoaster ride” since it started in 2002, Hamilton says. “Four years later we put the first hull in the water.” The Navy will purchase 55 ships in the LCS class. Each ship – including combat systems — is estimated to cost about $400 million.

Other major shipbuilding programs that will deliver several new vessels to the fleet in the coming years are the LPD-17 San Antonio class amphibious and the T-AKE logistics resupply ships.

The Navy is considering building a new guided-missile cruiser, called CG-X, although plans remain sketchy, Hamilton says. If the program gets funding, it could deliver the first ship in 2011, he says. An “analysis of alternatives” is ongoing to determine what missiles, sensors and propulsion will be employed. The hull, infrastructure and computing plant will be common with the Zumwalt class.

Another procurement that could get under way next year is the so-called “joint high speed vessel,” which will serve as a transport for cargo and troops in coastal areas. The Navy, Marine Corps and Army have experimented with several commercial catamarans and are now prepared to make a large buy. The program could be worth as much as $1.5 billion during the next decade. Hamilton says the requirements still are being defined.

A big question mark in the Navy’s shipbuilding plan is what the service will do about acquiring large cargo vessels to serve as “sea bases.” During the past two years, Navy officials had expressed support for a “maritime pre-positioning force future” ship that would be equipped with advanced cargo handling equipment and storage to accommodate an Army brigade and provide a floating base for the ground force.

That idea appears to be fizzling out as the Navy has recently contended it already has ships that serve as sea bases and it should not have to spend billions of dollars on customized floating ships for ground forces.

The Army, however, continues to stand behind the concept. “Who is a big fan of the sea basing concept? The U.S. Army,” says Brig. Gen. Robin Swan. He says the Army is concerned about future enemies blocking traditional points of entry into theaters, and would view sea bases as a means of deploying troops rapidly into battle.

Rear Adm. Mark H. Buzby, deputy director of Navy surface warfare, says the service still supports the idea, but it has yet to define exactly what sea bases should be. “We are still building forces that are going to enable a sea base,” he says. “To me, it’s what we’ve always have done, with different groups of ships.”

Norman Polmar, an analyst and author specializing in naval issues, says the Navy “was never enthusiastic about” sea bases. “It was a Defense Department initiative so the Navy had to support it.”

— additional reporting by Grace Jean

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