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Thank you for that kind introduction. Let me start by thanking you for your longstanding support of the U.S. military. and the Submarine Force in particular. The war on terrorism demonstrates the importance of a state-of-the-art defense industry that puts revolutionary technology into the hands of our fighting men and women, and you’re the people making that happen.

When people talk about America’s military juggernaut, they might think about submarines and ships, but I think about you. You’re the people and companies that built those submarines and ships despite thin profits, a declining stock market, and decreasing defense budgets. On the barest of margins, your sense of purpose has kept you a part of our team.

I’d say the Nation and our citizens more than ever in my lifetime realize your value. As many people ask, “What can I do to help?” you can take great pride in knowing that you are helping already in a big way. Thank you for keeping our Nation strong all these years.

Through your diligent efforts, our submarines remain deployed around the world, keeping our Nation safe. We’re also working to add the rest of the Sea wolf class to our arsenal; to bring VIRGINIA on line; and to steam at all ahead flank in designing and getting four SSGNs to sea.

On to tonight’s business: I want to do three things:

  • Update the SSN force structure picture that I discussed at this forum last year, using current numbers on the same graphs I used then. It’s getting better but still not well.
  • Deliver an electric drive wake-up call and discuss the way forward.
  • Discuss SSGN and the golden opportunity we have to demonstrate our transformational vision of payload modularity.

First, let me review the current situation with Submarine Force structure. The President sent his FY03 budget to the Hill today. Money is proposed to refuel all but two of the remaining Los Angeles class submarines. This is, and has been, the right near-term decision to stem the bleeding for Submarine Force structure.

This fight, fully supported by the last two CNOs, has kept us above 54 SSNs when five years ago it appeared we were headed for the low 40s. I believe that the rest of the right answer-to refuel the remaining two submarines-will eventually win support.

However, Los Angeles class refuelings don’t solve the longer-term problem.

This is the plan of record. (Figure 1) On paper, it doesn’t look terrible. It appears to keep attack submarine numbers in the neighborhood of 55, which meets the warfighting requirements but still falls short of the 68176 peace-time requirements.

However, the jump from one to three submarines per year in FY08 and out is unrealistic. It reflects the heroics required to undo the past five years, in which the increase to two ships per year has been pushed outside the FYDP year after year. It goes without saying that FY08 is also beyond the FYDP.

This ever-changing construction plan makes it hard for us to manage Navy budgets, and hard for you to manage your labor force.

For comparison’s sake, I want to show you the impact on force structure of increasing the NSSN build rate to two per year until FY07-and staying there. (Figure 2) Near-term, this is more realistic, but as you can see, force structure quickly drops below 55 in the out-years, so it’s imperative that we get to two then three per year as soon as we can.

As for the practice of continually pushing the build-rate ramp-up to the right, well I guess if you’ re only in your job for a few years it doesn’t look that bad. (Figure 3)

Even if you look on down the road as far as most business plans, the picture still looks like less than a disaster. (Figure 4)

You have to look over the horizon to see the disaster that’s being created by the building decisions we make today. (Figure 5) If a jump from one to three is bad in FY08, how about the jump required to recover from this catastrophe?

This is the Bad Plan-no plan at all. It is really very simple, the Virginia build rate must climb, or we’re looking at a serious national security liability just over the horizon.

Of course, the force structure question is ultimately a resource question, and the practice of buying submarines one at a time is not an efficient way to achieve the submarine numbers we need for the future.

I showed you this chart last year. (Figure 6) Multi-ship acquisitions would provide significant savings compared to one per year. Coupled with multi-year and Economic Ordering Quantity leverage, real savings are evident. So we should use all means that any good businessman would propose-innovative contracting schemes to maximize economic order quantities and multi-year contracts, but we are not. We talk about acquisition reform, but we are not executing that reformation.

As a result, we’re passing up huge savings conservatively estimated at over $100M per boat. We must ensure legislators and executive decisiorunakers understand the pain that comes from putting off smart decisions on procurement strategy until tomorrow.

It’s frustrating when we continue to buy submarines one at a time and to apply annual appropriations to submarines we know we need to buy … and we know we will buy.

All right, new soapbox. Let’s shift from submarine numbers to technology.

We’ve been talking about delivering an Integrated Propulsion System (IPS) and the wonders (that with modularity and full payload/sensor connectivity) it can bring as early as the NSSN authorized around 2010. Indeed in the Fall 2000 Undersea Warfare magazine I wrote:

“Future [Virginia] variants would benefit from the increased capability provided by an integrated electric power system. Navy has told Congress that IPS could be installed in a Virginia around 2010.”

Given today’s realities, this plan needs to be updated.

In view of the budget stresses created by years of under calling readiness requirements coupled with large manpower and health-care bills this year-and now exacerbated by fighting the war on terrorism-targeting the 2010 authorized submarine isn’t realistic.

The hoped-for delivery of technology by the DD-21 program that could serve as a springboard for transition of IPS into submarines has not materialized.

Further, the Navy’s Corporate Program still is not yet in place. We had counted on delivery of certain generic building blocks from that program. More on this later.

Moreover, we’ve learned some of the realities about this technology over the past five years, as we’ve worked with you to understand what IPS and electric drive bring to a submarine. We found that the technology is not yet mature enough to make a compelling case that justifies the major cost of development. Specifically:

  • The payloads under consideration for submarines today do not require significant electric power. In other words, you get power flexibility by putting the full reactor output power onto the electric grid, but what do you flex to?
  • From a naval architecture view, current concept designs are not significantly better with electric drive, especially since they may even be a little bigger and heavier.
  • Although we estimate the cost to develop a new electric drive propulsion system is comparable to that of a new mechanical drive plant, both cost more than current budgets allow.
  • There’s a stealth improvement, but it’s hard to size up and it doesn’t appear to be enough to justify the large investment to develop a new propulsion plant-at least not yet.

The bottom line is the technical case for electric drive is still a little weak in the knees as we look closer at the detailed engineering.

However, we now have a picture, based on hardware and design work, that shows us where we need to make progress, and we’re poised to begin the real engineering work. This work needs to make a compelling case for change.

  • We need to show this technology will improve key power system performance, while providing a propulsion system that is smaller and lighter.
  • We need good, old-fashioned engineering to quantify and validate the stealth improvements offered by electric drive. The proliferation of submarines and anti-submarine technology worldwide makes these quantifiable improvements imperative.
  • Additionally, we need to demonstrate whether the new submarine architectures made possible by electric drive offer real advantages to the ship drivers.

This transformation is critical, and we need to start working on it now, so that we can keep moving on our longer-term vision. How do we do that, given today’s budget situation?

Part of the answer is straightforward, but enough outside the Navy’s traditional approach to make people nervous. It’s been proposed several times but has failed to gain traction. The answer is a corporate Navy approach. Why does this make sense?

  • Going electric is a Navy vision, not just a submarine vision. Submarines are only one of the platforms going electric. Our CNO and our Navy leadership have endorsed the idea of an all-electric Navy. Congress has recognized the value of going electric. So it makes sense to coordinate the transformation in a central Navy organization.
  • A corporate approach is intuitively more cost-effective for development. To the extent that there are common compo-nents, or even common engineering challenges in related components, duplicated effort would be minimized by using a corporate approach. I see this at Naval Reactors, where the corporate knowledge associated with developing differ-ent, but related, reactor concepts allows us to achieve large savings in standardization.
  • The value of a corporate approach has been proven by other past efforts. One good example is the Los Angeles class Improved Propulsion Machinery Program. which was a technology development effort to improve propulsion plant machinery. By starting a program for surface ships in the early 1980s, we enabled the IPMP Program which in-turn enabled the capabilities realized in Seawolf and Virginia over a decade later

I am hopeful that we’ll see a Corporate Electric Drive Office soon. I’m encouraged by the support that the idea has been getting recently. With continued effort to prove these points, I’m con-vinced this approach can finally be validated for electric drive.

But there is a nearer term, more critical piece of the submarine vision that is in front of us and which we must capitalize on now-SSGN.

SSGN has sold itself to the Nation on the value of its ability to strike with surprise from close in. It’s a win for the Nation, and also represents a key, enabling platfonn for transformation for the Submarine Force and for the Navy. As all of you know, the road forward for us is getting modular; getting new, smart payload; getting connected; and getting electric. If we do it right, SSGN can make great strides in demonstrating the first three of these gets.

If done right, its modular payload interface will make SSGN the B-52 of the submarine fleet: capable of carrying almost any payload, for well into the foreseeable future. SSGN provides us a critical opportunity to demonstrate the utility of modular, connected payloads in a real submarine. Success for these technologies in SSGN will make the case for future submarine technology inser-tions into the Virginia class.

Recently at Owen Cote’s MIT forum, I issued a challenge to quickly demonstrate the transformational capabilities of SSGN, beyond Tomahawk and snake-eaters, to take advantage of this unique window of opportunity. We must appreciate that demon-strating payload concepts in SSGN will garner widespread support for our future ideas for NSSN.

I will be brutally honest with you. There is only one way we are going to seize this near-term demonstration opportunity-you need to help us make this happen. Let me explain how:

We are on course to demonstrate Tomahawk delivery around December of 2002, but this will not deliver on the full transformational potential of the SSGN concept. We need more, and many of your ideas are winners. However, the advenised price tags would cut the knees out from under the two pay-load/sensor teams.

Last week, Rear Admiral John Butler shifted resources in this fiscal year from the development of electric drive to suppon the demonstration. I’m not kidding about needing to drive IPS technology, but we have to feed the wolf closest to the sled first. However, we all know this is still not enough.

You need to help us to determine which of your ideas and hardware are near ready to bring them to the table now. Bring John Butler the payload and interface and we’ll provide the ship, the ocean, and the audience. We need to make a decision real soon, so if you have some hardware you want to show off, get on the phone to John tomorrow. The combination of the Navy’s investment and your corporate investment will pay long-term dividends.

And as I said, it’s not just the value of SSGN as a warfighting asset that these demos will address. It’s all about payload modular-ity for NSSN insertion. This is our chance to whet the warfighters appetites for a future submarine that combines payload modularity, and therefore the mission flexibility, of SSGN with the advanced capabilities in the Virginia class. Make no mistake, the credibility of our vision for a payload-modular Submarine Force can be greatly assisted by a robust, year-end successful demonstration on a Trident submarine.

By succeeding in a big way with SSGN payloads, by getting the Navy corporate effort off the ground for IPS, and by continuing to deliver state-of-the-art Virginia class submarines, we lay the groundwork for the future we still have in mind-an IPS, payload-modular attack submarine.

This is your challenge. As always, you will help determine whether we realize our vision. So now, let’s start doing the hard technical work to get there today.

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