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It is great to be here today to speak to this audience. This is my first opportunity to attend the Naval Submarine League Corporate Benefactors Day Meetings, and I am honored to have been invited to speak to you today.

I know Admiral DeMars is not here right now, but I want to thank him for his service to the Naval Submarine League, and I would also like to thank the Naval Submarine League for hosting this event. I would like to point out that my first introduction to Admiral DeMars was in Maneuvering when I was a Lieutenant Junior Grade.

First of all, I want to tell you that my role today as N87 is much different from my time here in the 90s. To be sure, resource issues and decisions that need to be made are challenging, but the environment today is more collegial, and the networks among the various stakeholders are open. Let me take the next few minutes and give you a better understanding of the landscape within which the N87 team works, and the kinds of issues facing the Navy and the undersea arena of the future.

I understand the core values that make the Submarine enterprise what it is today; those things that VADM Munns and RADM Walsh talked about, and it is our intention in N87 to foster those core values and educate others on our lessons learned because it is important to the future of the Navy. It is also important that we continue to strengthen and improve on our successes; our open architecture business model, VIRGINIA, combat system modernization (BYG-1) and others.

There are three principle themes I want to cover today: First, who we are in N87, and highlight our continually evolving network of networks. Second, I want to emphasize some important concepts that will help you better understand the Navy strategy, and the importance of aligning our leadership in order to deliver capabilities that count to the Commander. And third, I want to highlight some of our successes, challenges and opportunities.

Who We Are

In terms of warfighting background, mine is a bit different from most, and I understand the essence of our business and what works … and what doesn’t. My commands included USS L. MENDEL RIVERS (SSN 686), Submarine Squadron FOUR, Submarine GROUP 8, CTF 69 and 164, and Commander, Submarines South in the Mediterranean, where I had the unique opportunity to direct NATO submarine operations in that part of the world.

I also served as the Chief of Staff for the Commander, U.S. Naval Forces Central Command (FIFTH Fleet), and was the Executive Assistant to the Commander, U.S. Central Command during Operations Enduring Freedom and Iraqi Freedom.

More recently, as Director, Naval Forces Europe Plans and Operations, I participated in a significant transition and consolidation of U.S. Naval Forces Europe and the SIXTH Fleet. Out of 1,500 headquarters billets we returned almost 1,000 billets back to the Navy. Through the application of transformational business practices with a focus on value, we are now doing the same job the Navy in Europe was doing prior to the consolidation, but with fewer people. It just shows the power of what you can do when you have the opportunity to take and recreate something in a new location. It is more than just moving the water coolers, or moving the headquarters to a new building. It is about sending people off to their next jobs, and bringing in new people and having the power to create a flat and effective organization using new ideas and a formal approach to planning.

Now that I am back in Washington, I have completed the transition from operations and planning to the financial arena, and I want to share with you some of my general observations of what is new since I was last part of the N87 organization. Being back in Washington has also allowed me to spend more time with my family and try to enjoy a little more golf.

In fact just last month, as I was heading out to my car in the parking lot to go home after an average round of golf, an Air Policeman stopped me and asked, “Did you tee off on the sixteenth hole about an hour ago?”

“Yes Officer, I responded.

“Did you happen to slice your ball so that it went over the trees and off the course?”

“Yes, I did. How did you know?” I asked.

“Well,” said the policeman very seriously, “Your ball flew out into the highway and crashed through a driver’s windshield. The car went out of control, crashing into five other cars and a fire truck. The fire truck couldn’t make it to the fire, and the building burned down. So, what are you going to do about it?”

Obviously I was surprised by what the policeman was telling me so when he asked me what I was going to do about it I told him “I think I’ll close my stance a little bit, tighten my grip, and lower my right thumb.”

Our objective here at N87 is to not hit the slice in our Submarine Force programs. We want to hit the long balls, the short balls, or what ever the Navy needs-and continue to evolve our force capabilities in a direction that will be relevant in meeting the challenges of the future.

OPNAV has reorganized (again) back to very a similar mid-l 990s variant; however, the functions of N87 have changed significantly. Today, N87 is a complex network of interlocking authorities, operators, stakeholders and producers. The principle flow is from the CNO intentions (strategy) and resource planning. We are the CNO undersea planning staff, planning how to fund the next Navy, and the Navy after that. Taking the plans, we place resources and provide feedback to CNO and the Undersea Enterprise as to the risk and health of our investments. We are closely linked with other stakeholders-surface, aviation, expeditionary warfare, manpower and logistics. And as I mentioned earlier, the environment is collegial, professional and getting more open. We are working hard to identify and eradicate old practices that are costly and detrimental to the Resource Sponsors and the Navy. We are closing the seams, sharing lessons, and leveraging concepts in Maritime Operations across DoD.

In parallel, the Navy Enterprise construct is working to effectively deliver readiness and operational effectiveness at stabilized, and when able, reduced cost. The Undersea Enterprise (USE) includes many of you as either direct or indirect members. V ADM Munns gave you his perspective as the Chief Executive Officer, and as his Chief Financial Officer, mine is tempered a bit differently. I will talk later on this, but operational effectiveness informed by cost control to deliver capability is vital to our future-and I want to keep this in perspective.

Important Concepts: Understanding the Strategy

It starts with the strategy; the CNO clearly identified his three priorities in 2006, and he reaffirmed them just recently for 2007-he thinks they are about right. We understand his priorities and know how they link to the USE effects and priorities.

Remember, we are a nation at war. We must sustain combat readiness and simultaneously build the next Navy (and the one after that) and on our part, a major effort is building VIRGfNIA Class SSNs. As Admiral Donald noted, building the 313 Ship Navy and working to stabilize the industrial base is important. However, we must also engage with our allies to build the CNO vision of a 1000 ship Navy, and the 200 plus coalition submarines that comprise it. Today, there are 43 nations that operate about 360 submarines-300 of which are quiet diesels. Some of these countries are already in our coalition, and we are working on the others. Submarine rescue is a great venue to bring this coalition together, and we are working hard across the globe in this important area.

Speaking of others, last year in Naples we had Navy-to-Navy Staff talks with the Russian Federated Navy. The visiting Russian Federated Navy team was led by a Vice Admiral and included several Russian submarine captains. It was a watershed event that discussed more than just safety at sea.

Another one of the CNO priorities is developing leaders for the 21st century, and this is perhaps one of our most important endeavors. If we do not get that right, little else will follow. We have to develop the 21″ century leaders in the right way. N87 is part of VADM Harvey’s and RADM Gove’s Manpower Cross Functional Team which is charting the future in this important area. This team of Navy professionals is working very hard taking the raw materials that our society produces and is turning them into sea warriors for the future.

Today, eye watering sailors are doing great things every day in all parts of the world, at sea, overseas, on land and at home. Work in this arena feeds submarine crews and our leadership teams, from our Commanding Officers, Executive Officers, and Chiefs of the Boat, all the way down to leaders on the deck plate. Please be strong advocates in our cities and towns as we work to maintain the vital support to our men and women in uniform.

Many of you know that VADM Munns approved a series of USE effects. They are aligned with the CNO priorities, and we watch progress towards achieving these effects very closely. COMSUBFOR and his team, COMSUBPAC and N87, along with the rest of the Enterprise, work together very closely on activities designed to deliver those effects. In N87, we spend the majority of our time working to plan for the delivery of and fund future capability.

However, the horizon is not clear. We are in an austere fiscal environment, and it will likely continue to be this way for some time. Katrina recovery costs continue, as does the war in Iraq and Afghanistan. Military Health Care is putting stress on the DoD budget, and we will need to recapitalize the Army and Marine Corps over the next few years. Much of their ground equipment needs to be replaced. Add in the reality of a brittle energy production and distribution system contributing to unpredictable energy costs-and you can see the picture. These issues dictate that all of us-Navy, producers, suppliers and customers must all work together-and provide high return on the Nation’s investment

We must drive the non-value added cost out of all new and existing systems, and we will need your help. The CNO and our Navy leaders have given us a sound strategy, clear effects and objectives, and together, we must now solidly execute.

Long Term Strategy/Objectives 1996

Some of you may remember N87 strategy from 1996, when Admiral Giambastiani was the Director. It can be categorized by Stealth and Survivability through acoustic and non-acoustic means; Combat Capability and Affordability through platforms, weapons, sensors, vehicles, tactical development, doctrine, training and operational availability; and finally, it must be affordable. As you can see, these enduring concepts are still applicable today.

Long Term Strategy/Objectives 2007

Our approach and strategy for today is still evolving, but the N87 team is working on the following focus areas. Stealth, persistence and agility are all interlocked and vital to our force. We use an effects-based approach with the desired endpoint in mind. Mission accomplishment is defined in terms of effects-from non-kinetic, to the full range of capabilities when needed. From an operational perspective, if it’s not relevant to our future-don’t waste our time. We want platforms, sensors and vehicles that extend our reach to achieve the effects, all in the tactical network, and feeding the Joint Commander. And as I mentioned earlier, it begins with the Total Force, all of our people; they continue to be our most important resource.

Future Readiness must include good cost understanding from initial concept through final delivery, and it doesn’t end until the lifecycle is completed. Suppliers must help us better balance the cost equation to retain dominance. Mutual understanding on how to take, manage and share risk in our arena is vital. We must understand each other’s risk, but one of our goals is to remove as much operational risk from our Commanders as we can.

The USE resource Enterprise is wide-and we are actively constructing business models with our partners in aviation and surface warfare, and many others, building trust and confidence and identifying and fixing problems among ourselves when observed behaviors sub-optimize our collective links. A collaborative approach is important because problems in large acquisition programs affect us all. Barriers to openness and collaboration are still around, but are avoidable with skill.

You will note an emphasis on readiness at cost. We know the pressures of limited resources-and the challenges mentioned earlier. We must strive to look for clarity in our value chains. This can be summarized in the tag line Capabilities that Count at Cost with on Time delivery (C3T). Today, we are challenging the amount of time needed to bring new capabilities to the fleet. The technologies we are going after can be difficult to develop, and they take time. We need to better understand and better appreciate that time scale earlier in the process.

My role as N87 is to guide development and funding of capability following CNO and USE guidance to inform our priorities-the first C in C3T and then team with Program Executive Officers and Program Managers to achieve and deliver the capabilities to our forces. The process starts with integrated but innovative science and technology, moves to research and development with realistic expectation for transition to procurement, and then production. Predicting risk and return on investment are enduring elements of this strategy.

Aligning Leadership

Within Navy, we are part of a good system, not perfect or monolithic, but we remain focused and understand each others’ objectives by communicating regularly and openly. We have had notable successes in the past, but our future can be made even better. The requirements generation/validation process of Sea Power 21 and the Joint arena interacts with other processes that are affected, both positively and negatively, by corporate Joint and Navy views. With a compelling need articulated, we can and do respond to innovation.

In the Joint arena we are building a cadre of portfolios and are working the fit. The joint capability process is defined. The Joint Staff and the Services are working to make generation of joint capabilities more productive and efficient. Combatant Commanders and Navy Component Commanders have a role to influence the decisions on resourcing capabilities, and on competing in the Navy capability arena. They know how to seek available capabilities and then ask for new capabilities as well. Rear Admiral Mark Kenny and his team at the Center for Submarine Counter terrorism Operations is doing a great job in matching our deployed submarine capabilities to the COCOMs demands, and then circulating knowledge of capability and education to the areas of need. The goal is to provide a good product based on a needed capability, delivered on time, with cost visibly under control.

Among the financial and capability process, Joint integration in DoD and approval by Congress are extremely important. And finally, Industry, you are absolutely essential to this process-“no, you are vital”-) cannot say it stronger. You are the producer and supplier of what we need to succeed in delivering national security.

As you can see, there are many lines of communication, and we in N87 must keep those lines open and robust, and the information flowing.

Capabilities that Count

Understanding the battlefields and excursions of tomorrow through campaign analysis is complex and challenging work. But these analytical efforts are important, they inform our leadership, and they ultimately influence the capabilities that are funded. But at the end of the day, these capabilities must be relevant. They must support major combat operations and extend our reach into our environment-the battlespace. From global strike, where our national security demands a secure and dependable strategic deterrent, to intelligence, surveillance, and reconnaissance in support of GWOT operations. The persistence, speed, agility, and responsiveness-all hallmarks of our Submarine Force-and the calculus to develop and produce these capabilities into the future is complex, and it demands the best from us all

Producing Value is Tough

Producing value-to the Sailor on the deck plate and value to the Commander in the theater is tough. Cost control and return on investment are key-instinctively we think that Navy procurement cost increases exist in virtually every program and for many reasons. However, early and continuous integration with stakeholders and suppliers is important in controlling cost and to transmitting value to our Sailors first, and then the taxpayers. We have talked about how important it is to get good initial cost estimates so that we can better understand each other’s perspective on the risk equation. Here at OPNAV, we are looking at new tools to access and then manage this risk.

We must continue to focus on capability performance that is underpinned by relevant and effective concepts of operations. It is really important that the CONOPS we develop are practical and fleet endorsed. The Advanced Deployable System (ADS) is not a good example of the marriage between CONOPS and capability. Through-out its development, ADS was supported as a good program. As the program was nearing initial testing, a fleet review determined that the capability construct did not have the practical value desired, and as a result, we cancelled the program. We need to learn lessons on how to better anticipate and reduce such risks.

We need to continue to foster innovation and translate it to research and development, and then on to procurement and production. But we must understand its cost, the risks, and return on investment all supporting tactical relevance.

Building on Successes

We have had some great successes. Admiral Donald and Admiral Munns mentioned a few, but I want to highlight some others, specifically VIRGINIA and our combat system modernization. But first, I want to highlight several key improvements. PA TRI OT Radar and the Automated Information System for improved close-in tactical control, and the new and modem Valve Regulated Lead Acid Battery a zero-maintenance battery that doesn’t require the traditional battery-support systems, which has helped resolve several vendor supply challenges. Other successes include Information Operations capabilities in support of the War on Terror. An exciting capability-rapidly developed and already at sea today. The Mk 48 MOD 7 CBASS heavy weight torpedo-still evolving and getting better. And finally, the total force-there are numerous training initiatives in the fleet and in our school houses that are preparing our Sailors to operate our submarines around the globe, wherever needed.

We continue to refuel our OHIO Class SSBNs, and we will complete the final D5 missile back-fit very soon. I will tell you, the SSBN Refueling Overhauls have been an understated success. With our great Naval Team-shipyards and Sailors, the program is on track and on schedule, and is returning these wonderful ships to sea in great shape. This program success is a testament to the capability of our public shipyards and to many of you in this room. The OHIO Class SSBN will continue to provide our Nation with a survivable strategic deterrent capability well into the middle of this century.

The SSGN conversion program is another success story, with three of the four SSGNs delivered back to the Navy. The program achieved a significant milestone on January 24’h 2007, when all three operational SSGNs were at sea simultaneously, performing testing, training, and certification. SSGN-what a tremendous new naval capability that will begin operations soon. Now we have to learn how to best employ and continue to evolve these ships as we gain operating experience. And finally, we have 10 fast attack submarines operating around the world at about 70-80% OPTEMPO-they are in high demand and continue to smoothly accomplish their vital missions.

VIRGINIA Class SSN Overview

I promised Admiral Hilarides I would highlight the great work General Dynamics-Electric Boat and Northrop Grumman-Newport News, and the myriad of suppliers are doing in continuing the record of excellence of producing VIRGINIA Class submarines. Construction performance data clearly shows accomplishment and also promise. I was honored to have been in Galveston, Texas for the commissioning of the TEXAS-what a marvelous experience that was 10,000 Texans and others showed up, and it was a great day for the Navy and the Submarine Force.

Assuming Congress approves our request in the President’s budget, we will begin discussion for the next VIRGINIA multiyear procurement contract in the fall. This will likely be a seven-ship, five-year contract, ultimately leading to the production of two VIRGINIAs per year in FY 12 for a total cost of$4B (FY05$). Team Submarine and our industry partners are working together to achieve the $2B (FY05$) per ship cost goal, a nearly 20% reduction.

Combat System Modernization

Combat system modernization is another success story. The Submarine Force open architecture business model is leading the way for the Navy. The Surface Force is looking to leverage the tools of this model to modernize surface combatants in mid-life.

In the future, the challenge for our combat system modernization program is to continue to scrutinize and apply discipline to the open architecture business model process. We must ensure we deliver Capabilities that Count at the right-time, and do it in such a way that we maximize the return on our nation’s investment. As of January 2007, 51% of our SSNs have been modernized with open architecture sonar and fire control systems at about one-eighth the cost of new legacy-type systems. Our SSGNs will also receive the latest sonar and combat system capability during their first post-conversion modernization period.

But. .. Some Challenges

But we also have some challenges coming up. We all recognize Undersea Dominance is about extending our reach and tactical control, and more recently, about being networked at the right time with the right bandwidth. We continue to work on extending our reach with unmanned undersea vehicles (UUVs). Last year at this event, Admiral Walsh mentioned our successes with the Mission Reconfigurable UUV system. We continue to work to deliver this capability.

The Predator UA V is a good example of a model that folks find attractive-an engine with a sensor package that were originally based on a commercial solution set that delivered a significant low-cost capability. To be sure, the undersea environment is substantially more difficult-but we have had some notable successes. We remain committed to a measured risk-based approach for an underwater vehicle capability to extend our reach in the battlespace.

Another one of our priorities is improving our ability to communicate at higher speed and at deeper depths-to better link target and friendly force data and rapidly receive Commander’s intent; all important capabilities that enhance operational dominance. At the beginning of this program we ran some experiments and took risk early on, and we learned a lot. As a result, we now have a good sense of the maturity of the technology available and the achievability of the various concepts. We are resetting the program to deliver those capabilities that our experiments validated, and are going back to the drawing board to refine the whys for the other capabilities that have not yet worked, but remain important to us. We are committed to comms at speed and depth, it is important to Joint Commanders, and it will remain a priority for us.

Congress continues to deliberate on the Conventional TRIDENT Modification (CTM) program. CTM is a STRATCOM initiative to develop and deliver a rapid, global conventional strike capability using conventional munitions on TRIDENT 05 missiles. DoD is working with Congress to communicate the details of this program. Admiral Steve Johnson and his team at Strategic Systems Programs have a solid plan to implement a production cycle that would produce this capability if approved by Congress.

We also have several exciting new concepts that are being worked by teams which will present both technological and production challenges. Unmanned Aerial Vehicles (UAV) for example-Admiral Mark Kenny is working with the Combatant Commanders and Special Operators to develop a UA V launch capability from a submarine in support of operations ashore.

Some of our new sensors, like the sail mounted Low Cost Conformal Array, will enable our Commanding Officers to have better tactical control and awareness of the tactical environment.

Finally, let me mention rapid GWOT capability insertion-thanks to Mark Kenny and his team at the Center for Submarine Counter terrorism, antenna changes, communication equipment changes, and new networks are onboard our submarines today, allowing them to receive relevant information and communicate with joint commanders.

Construction Performance (CAPEX)

Returning to some challenges on VIRGINIA-Capital Expenditure (CAPEX)-we are on the glide slope to reduce the cost of VIRGINIA and CAPEX is one of the reasons. There are many examples of investment by both industry and government that is changing and improving the landscape in production facilities that will reduce the construction cost of VIRGINIA.

How do we take a program like VIRGINIA, a submarine that has already been designed, built and delivered within six weeks of the delivery date on a six year old contract, and then ask the designers, suppliers and builders to produce a 20% cost reduction? Thanks to the VIRGINIA Program team, Navy and industry, this is a challenge that I think we will meet.

Design for Cost Reduction

Another facet of the VIRGINIA Cost reduction is design changes that will result in lower production costs. We are taking a hard look at the bow redesign and payload interface module-we want to make sure we understand all of the questions associated with this design change. The Shipbuilder, Program Office, and N87 have commissioned an Integrated Process Team to fully develop the concepts. This is an area we need to push hard to produce real capability-but first we need to peel back the onion and fully understand all of the details.

In addition to the bow redesign, we are also looking at electrification of the torpedo room by using two electric motor designs to replace hydraulic motors in 20 applications. This change could ease construction complexity and reduce cost by eliminating high pressure hydraulic piping and components. We are also using a low risk vendor supplied Reverse Osmosis Unit with proven technology to reduce the cost by over $500,000 per ship.

Commitment to Open Architecture

The USE and our team of science/academic and industry partners pioneered the Open Architecture Business Model. We are extremely fortunate that our predecessors had the foresight and wisdom to demand a more cost efficient and effective way to retain our Fast Attack submarine’s edge in undersea warfare for the life of the ship. We remain committed to this set of business processes-they have proven themselves-but we are looking for capabilities that count.

We are delivering improved capabilities in the areas of advanced sensor processing, increased frequency coverage, multi sensor correlation, operator enhancements and bell ringers to improve the operators performance, acoustic communications, Digital Data Collection System, and other capability improvements. Our goal is to more quickly allow the Commanding Officer to impose tactical control in the battle space. We have already included several of these improvements in our latest advanced processor builds and they are out there on the boats.

We continue to expand the open architecture business model to other non-propulsion electronics on our submarines, including electronic surveillance, information operations, communications, imaging systems, navigation, and weapon systems. We are also investigating ways to better tune the information environment in the control room to support the kinds of decisions our Commanding Officers need to make while reducing the need for operator intervention.

Today, we are asking if we have cleared the low hanging fntit? Are we delivering the value which will pay dividends to our Commanding Officers and ASW Commanders in the future? Is the cost for each capability understood? Is the rate of capability insertion optimized to foster submarine Operational Availability, and is the degree of technological risk understood and challenged? We in N87 are working with the large team of stakeholders to answer these questions with an end result of C3T in mind.

And Finally Some Opportunities

I will close by highlighting some particularly interesting opportunities in which we can all be involved. I believe our culture is strong, we are fostering an environment ashore and at sea that builds and supports a total force that possesses the core values that make the men and women of our Submarine Force the best in the world.

As Admiral Walsh noted earlier-SSGN is nearing fleet introduction and represents an untapped operational reservoir. We must posture to help the COCOMS and Navy learn how to best employ this new capability and then continue to evolve this set of capabilities. SSGN truly is an impressive accomplishment between government and industry; now it is up to us to get their crews ready to do the Nation’s work.

Our Enterprise approach is focused on providing readiness and operationally effective capabilities at an understood cost. This includes the modernization and recapitalization elements with which many of you are directly involved. Navy leadership is committed to the model which aspires to assure freedom of information exchange, and which builds confidence and trust among all of the stakeholders in the enterprise construct.

And finally, the Lean Six Sigma approach to the value chain. Lean Six Sigma is not a panacea; it is a tool for us to use to examine our processes in a way very similar to how we were raised as nuclear trained Officers. Critically looking at how we do business, and if there is a part of our work that does not add value, change the process. This is the direction the Navy is heading.

In closing, in my view, our future is bright. I challenge everyone here to work better with all of the other stakeholders to make our future Navy, and the one after that, continue to exert the dominance in the undersea domain that is needed.

Thank you.

Naval Submarine League

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