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Thank you Admiral Reynolds for that kind introduction. Today I would like to provide you with an update on Submarine Force programs and issues that are important to both the Navy and our industry partners.

Let me start with Submarine Force structure. Currently we have 53 SSNs in the fleet, comprised of 49 LOS ANGELES Class (688), 3 SEA WOLF Class, and l VIRGINIA Class. USS SAN FRANCISCO (SSN-711) is included in this total. Last fall, the CNO approved the repair of SAN FRANCISCO after its tragic undersea collision with a seamount in the Pacific. I will discuss the plan to repair her later in the brief. We also have four SSGNs and 14 SSBNs and these numbers will remain steady pending any changes to the Nuclear Posture Review. Currently, three SSGNs are undergoing conversion, and USS OHIO (SSGN-726), completed her conversion and was delivered back to the fleet in December 2005. She will IOC in 2007.

Focusing on the period encompassed by the President’s Budget for Fiscal Year 06 (PB 06) Future Year Defense Plan (FY 06 through FY 11 ), SSN force structure will remain above 53. However, this is not the period that concerns me. The period that concerns me is in the out-years when SSN force structure begins to dramatically drop off. Looking out to 2011, four out of five submarines in the Submarine Force will be 688 Class submarines. 688s will continue to be the workhorse of our fleet in the foreseeable future, and this illustrates the importance of maintaining a robust modernization program. Today, USS LOS ANGELES’ combat system is as modern as USS CHEYENNE’s, our newest 688 Class submarine. We have done a great job modernizing our submarines, and modernization will remain a budgeting priority for me. However, around 2018, we will start decommissioning 688 Class submarines at a rate faster than we are building VIRGINIA Class submarines. Remember, in the late 1980s and 1990s we were building three and four 688s per year, and they will begin to reach their hull end-of-life starting around 2018. Under the program of record of building two VIRGINIA Class per year starting in FY 12, SSN force structure will drop to 40 in 2028. If we were to only build one VIRGINIA Class per year, force structure will drop to 28 in 2029. In any case, to maintain a force of about 48 SSNs, we would have to build more than two VIRGINIA Class submarines per year, and that is just not possible considering the CNO’s current SCN budget and cost.

Let me take a few moments to discuss SSN force posture. Earlier I mentioned the CNO approved the repair of SAN FRANCISCO. SAN FRANCISCO will undergo repairs at the Puget Sound Naval Shipyard in Bremerton, WA, and then return to service in either San Diego or Pearl Harbor. To restore the Pacific AOR SSN operational availability, USS BUFF ALO will transfer from Pearl Harbor to Guam to replace SAN FRANCISCO, and USS HAMPTON will transfer from Norfolk to San Diego. Additionally, over the past two years, three Atlantic based SSNs have deployed to the Pacific Area of Responsibility (AOR) in support of Combatant Commander operational requirements.

Let me give you a quick update on the VIRGINIA Class program. VIRGINIA has more than exceeded all expectations since her commissioning just over a year ago. Due to fleet operational commitments, the Type Commander chose VIRGINIA to fill an emergent need for an early deployment. In support of this deployment, VIRGINIA completed the first ever COMOPTEVFOR Quick Reaction Assessment for an entire platform, allowing VIRGINIA to deploy prior to completing her Post Shakedown Availability, Developmental and Operational Testing, and four years ahead of her projected first deployment date.

VIRGINIA proved to be fully ready for her historic deployment, providing critical mission deliverables to her operational commander, employing front line and ship unique combat systems, ship control systems, propulsion systems, and communication systems with resounding success. The crew clearly demonstrated the flexibility of the newest class of submarine to deploy independently, and sustain operations for extensive periods of time.

VIRGINIA’s performance working up to and executing this deployment was nothing short of remarkable. Advanced design and modular construction techniques, effective crew training, and successful sea trials were key enablers for this early and successful deployment. VIRGINIA is currently undergoing an I I-month Post Shakedown Availability (PSA) at General Dynamics Electric Boat, currently scheduled for completion in December 2006.

There has been much discussion about the cost of the VIRGINIA Class. Even with its advanced design, modular construction and advanced upgrade flexibility, the ships are considered to be too costly in today’s fiscally constrained environment. Therefore, in cooperation with its industry partners, the Navy is taking action to drive down the cost of VIRGINIA, with a goal to reach an average per-hull cost of $2 billion (FY05$).

There are several cost savings initiatives that will result in achieving the $2 billion (FY05$) per hull goal. These initiatives include enhancing construction efficiency, increasing the production rate to two hulls/year, taking advantage of Economic Order of Quantity cost savings through multi-year procurement contracts, and designing reduced cost into VIRGINIA.

One example of enhancing construction efficiency is through the Capital Expenditure (CAPEX) program. The CAPEX program is designed to help the shipyard make capital improvements to their infrastructure that will ultimately result in VIRGINIA Class cost savings. The shipyard presents a business case to the government for the proposed CAPEX, and if the business case meets all of the requirements, the government pays one half of the investment up front for the capital improvement. When the improvement delivers the projected cost savings, the government then pays the other half. If the CAPEX does not deliver the expected savings, the shipyard must return the money.

The Transportation Upgrade CAPEX, for example, will allow VIRGINIA to be built with four Super-Modules at the facilities of the former Quonset Point Naval Air Station. This results in reduced construction time through improved modular assembly (CAPEX-enabled) in the Steel Processing Facility, and the Sheet Metal Fabrication Facility. Additionally, benefits include improvements in final assembly and testing.

Another CAPEX example is the Coatings CAP EX. The Navy and its Industry Partners are now using a new SHT mold-in-place Coatings Facility to reduce SHT cost, and shorten PSAs by five months. This initiative delivers the ship sooner and more economically.

Let me shift gears and talk about Tango Bravo. As you remember, Tango Bravo is an initiative to develop emerging technologies that allow us to overcome Technology Barriers (TB) that may ultimately result in the reduction of the cost and displacement of our submarines. To date, five contracts have been awarded that cover three of the five key Technology Barriers, to include Shaftless Propulsion, External Weapons Stowage and Launch, and Reduced Hull Mechanical and Electrical infrastructure. Contracts were not awarded in two of the Technology Barrier areas: Hull Adaptable Sonar Arrays and Reduced Crew/ Automated Attack Center. It should also be noted this program is divided into three separate phases to ensure progress is made in each phase before the additional funding is awarded.

Tango Bravo Phase I efforts are well underway. Shaftless propulsion contracts complete Phase I in late May 06. External weapons and infrastructure reduction (X-Planes) contracts complete Phase I in Nov 06. Work is progressing on schedule and there are no show stoppers to prevent achieving technical objectives. Funding for Phase 2 contracts will be awarded depending upon a thorough technical evaluation of Phase I efforts. Information will be made available to the design community in FY 08 with final results in FY 09.

Looking towards how we might utilize the results of Tango Bravo, we need to consider when the next VIRGINIA block buy will occur. Tango Bravo demonstration information should be available by the end ofFY08, with fully evaluated results in FY 09. However, the technology probably will not be mature enough to incorporate directly into the VIRGINIA design. The next block buy in 2014 may be the first opportunity to use the technology developed through Tango Bravo.

Another area that is extremely important to all of us is the preservation of the Design Industrial Base. The advanced submarine Design Industrial Base is comprised of 19 critical engineering skills and 5 designer skill areas. Under the current plan of record it is estimated that critical engineering and designer skill areas will begin to atrophy in the near-term (2006). By 2009, most skill areas (16 of 21) will be at or below the critical minimum level.

Mitigation efforts to help sustain these critical skills through 2012 are underway. The VIRGINIA Program Office is funding the RAND Corporation to conduct an independent study to investigate the minimum core requirements and inform Navy on costs, benefits and risks of different options for sustaining the submarine design capabilities. Results of this study will be available in the late summer/early fall of 2006. Additionally, VIRGINIA cost reduction initiatives are a possible near-term solution for partial sustainment of critical submarine design resources. This solution uses portions of the Design Industrial Base from FY06 through FYl3 to develop recurring, long-term SCN cost reductions in support of attaining the $2 billion/hull (FY05$) goal. These two initiatives will ensure portions of submarine design industrial base are maintained until approximately 2012, but with skills area shortages in 5 of the 24 skill areas. However, this will not exercise the large-scale integration skills necessary for cost effective whole ship design programs.

Other solutions being considered include new follow-on design work that may include VIRGINIA technology insertion to achieve reduced cost using Tango Bravo initiatives. Another possible option under study is to begin design work on the next generation undersea strategic deterrent concept around FY 12 to support authorization in FY20 for the lead ship (this supports Initial Operating Capability in FY28). However, large-scale integration and other specific skill areas necessary for a high quality, cost-effective design could be degraded or lost if initial concept design does not begin earlier than FY12.

I would now like to shift topics and discuss the SSGN conversion program. Currently, three ships are undergoing refueling and conversion. The fourth ship, USS OHIO, completed her conversion in November 2005 and was delivered to the Navy in December 2005. She is currently undergoing extensive post delivery testing. Her return to service/re-dedication ceremony was held on 7 February 2006.

OHIO’s conversion is truly remarkable considering the program did not receive its first SCN funding until January 2002, with an Initial Operational Capability (IOC) of 2007. To meet the desired IOC date, the design, manufacturing, and conversion were conducted concurrently using many of the same design tools and processes pioneered by the VIRGFNIA Class program. OHIO will be homeported in Bangor, WA. FLORIDA will be homeported in Kings Bay, GA. The other two SSGN homeports are yet to be determined.

The SSGN is an outstanding example of the Navy’s commitment to getting everything possible out of the existing submarines in the force. In addition to carrying as many as 154 TOMAHAWK land attack cruise missiles in its Multiple All-Up-Round Canisters (MACs), it can carry two Advanced SEAL Delivery Systems (ASDS), each a 60-ton ship, or two Dry Dock Shelters (DDSs) (or a combination of one each), plus up to 102 Special Operations Force personnel, including all of their ordnance.

Let me give you an idea of just how much SOF equipment an SSGN can carry in addition to the two SOF delivery vehicles. An SSGN can carry 26 combat raiding craft, 150 6-gallon fuel bladders, 39 outboard motors, small arms weapons and over 8,700 pounds of high explosives. Carrying up to 8 SOF Stowage Canisters and dual Lockout Chambers for SOF egress and ingress further enhances the SSGN’s warfighting capabilities. With this kind of manning, equipment, firepower, and payload an SSGN can support a SOF campaign, with multiple, simultaneous operations taking place. This represents a significant improvement in SOF capability over that of a 688 Class submarine.

Let me give you an idea of just how much SOF equipment an SSGN can carry in addition to the two SOF delivery vehicles. An SSGN can carry 26 combat raiding craft, 150 6-gallon fuel bladders, 39 outboard motors, small arms weapons and over 8,700 pounds of high explosives. Carrying up to 8 SOF Stowage Canisters and dual Lockout Chambers for SOF egress and ingress further enhances the SSGN’s warfighting capabilities. With this kind of manning, equipment, firepower, and payload an SSGN can support a SOF campaign, with multiple, simultaneous operations taking place. This represents a significant improvement in SOF capability over that of a 688 Class submarine.

Speaking of payload, we are committed to improving the submarine’s warfighting capability through the integration of a wider range of payloads. One payload we are developing is the Mission Reconfigurable Unmanned Underwater Vehicle (MRUUV), which is launched from a 21-inch Torpedo Tube, and designed to operate independently of the submarine to conduct Mine Warfare and JSR missions. In October 2005, we conducted at sea testing onboard USS OKLAHOMA CITY (SSN 723). This testing demonstrated end-to-end pier side functionality of the UUV, its recovery system, UUV impulse launch capability, and UUV post-launch operations. Unfortunately, during this test we were not able to demonstrate UUV homing, docking, and retrieval due to a failure of the recovery Arm Acoustic Array. Following repairs to the recovery arm, additional MRUUV launch and recovery testing was conducted onboard USS SCRANTON in late January where UUV # 1 successfully homed and docked in the recovery arm on SCRANTON (SSN 756). Considering the complexity of this system, this is a real success story, but we have more work to do in order to deliver this capability to the fleet. In closing you can see the Submarine Force has made good progress over the past year. VlRGlNIA completed her first deployment, OHIO has been delivered, and we have conducted successful testing of weapons encapsulation technology and the Mission Reconfigur-able UlN. We continue to focus on VIRGINIA Class cost reduction initiatives, and the right focus is being applied to the full spectrum of Undersea Warfare in a fiscally austere environment. We will continue to push the technical envelope to maintain our asymmetric advantage and our total dominance of the undersea battlespace. Thank You.

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