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Good morning. It is indeed an honor for me to be here this morning to discuss with you the Navy’s FY09 shipbuilding
plan, future submarine efforts, and how you can contribute to our future Navy.

Let me start with the 2009 President’s Budget that was submitted to Congress in February of this year. This budget includes funding for seven new construction ships valued at $12.4B. And for the first time in a long while there arc no lead ships in the budget. The seven ships include 2 LCS vessels, one DDG 1000, one VA Class submarine, two T AKEs, and the Navy’s first Joint High Speed Vessel. As you know the authorizers have marked and these marks in some cases do not support the President’s Budget submission. So we have some work to do with the Congress over the next several months.

The Navy faces many challenges in procuring a force that will be effective over the broad spectrum of naval missions anticipated in the coming decades. We must procure ships in the most efficient and cost effective manner possible. The 30-year shipbuilding plan reflects the capabilities needed to meet the challenges the nation faces with a manageable degree of risk. As CNO has stated, the 313-ship force structure represents a floor- the minimum number of ships the Navy should maintain in its inventory to provide the global reach and persistent presence expected of Naval forces. Our PB 09 budget reflects the best balance of resources to execute our requirements.

Specific to submarines, in PB 09 the Navy is requesting S2. I B of full funding for one Virginia Class submarine in FY09 and advance procurement for the FY I 0 boat and advance procurement for 2 boats in FY 11. The Virginia Class construction program is continuing to make progress towards realizing CNO’s goal of buying two Virginia submarines for $48 as measured in FY 2005 dollars, starting in FY 2012. With Congressional support of the addition of Advanced Procurement funding of $588M in FY08, the Navy has accelerated the production of two Virginia Class Submarines per year forward from FY 2012 to FY 2011.

While press coverage tends to focus on the challenges in shipbuilding, there really is good news to report. The Navy and Industry shipbuilding team accomplished a great deal in the last year. We commissioned 5 ships into service, christened an additional 6 ships, and returned the last 2 SSGNs to the fleet. My office spends considerable time managing our shipbuilding programs in a portfolio manner. Over the last year, we’ve rebaselined contracts for those ships affected by Hurricane Katrina and awarded 6 contracts, under special authority granted by Congress to pay for infrastructure improvements to the shipyards on the Gulf Coast impacted by the hurricane. We ‘ ve also restructured the LCS program; we ‘re in negotiations for the lead CVN 21 and the next VA Class Multiycar; and we’ve awarded contracts for the dual lead DOG 1000 class ships.

Specifically within the submarine programs, the Navy has seen great progress. As I mentioned earlier, two SSGNs were “Returned to the Fleet” following their conversions and overhauls. The SSGN Program Office was recently presented with the Packard Award for Acquisition Excellence recognizing outstanding efforts. We’re coming through the Reliability Improvement Program for ASDS. And SRDRS has been certified and will participate in an international exercise later this month. Also last year we saw the commissioning of USS HAW All, christening of NORTH CAROLINA, and keel laying of NEW HAMPSHIRE.

This year promises to be just as busy. In April 2008 we held a keel laying ceremony for NEW MEXICO. On May 3..i we commissioned USS NORTH CAROLINA, in June we will christen NEW HAMPSHIRE and commission her in October 2008, and we’ ll christen NEW MEXICO in December. So this year we plan to christen two submarines and for the first time in a long time we will commission 2 submarines in a single year. This is good news! The VA Class Program entered into OPEV AL last month. This is the largest test program for the Navy, as all seven mission areas for the
VA Class will be tested during OPEV AL.

As you know, for the Virginia Class, the procurement of two submarines a year by Fiscal Y car 2012 is dependant upon the unit cost per submarine being less than 2 billion dollars as measured in 05 dollars. The Program Office is continuing to address the five areas that were identified previously to achieve the remaining cost savings. first, the shipbuilding team must continue to work to maximize efficiencies. Second, the Navy must refrain from making
requirements changes to the VIRGINIA Class design. Requirements creep cnn add significantly to the cost of any program. Third, the Navy and the shipbuilders must continue investing in producibility improvements through the capital expenditure funds set aside in the current Multi-Year Procurement contract. Fourth, the Navy is investing in design changes that will make the submarines more producible, and therefore less costly to build. These
design changes must have measurable returns on investment.

Finally, the Navy is exploring the option of purchasing materials on a portfolio basis, rather than separately for each acquisition program. This area is broader than submarines. Potential savings come in the form of economic order quantity purchases, regional savings, and commercial leverage. This would potentially allow the Navy to reduce the shipbuilding costs associated with material, which accounts for an average of 57% of the annual shipbuilding budget. These actions will help the Navy achieve the $28 per boat target.

The Navy also has a number of other cost reduction initiatives and processes in place lo capture commonality benefits for the Current Navy and the Next Navy. These initiatives focus at the ship level, the system level, the material level, and on processes. For instance, in the Current Navy, commonality is enhanced through commodity contracts across multiple platforms; parts commonality; common processing and display systems; modularity; Open
Architecture; and software reuse. An example of commodity contract is the recently awarded contracts by NA VICP for valves, one of the five highest volume commodities for the Navy. Five top valves representing – 35% of valve installations were placed on commodity contracts earlier this year. This type of commodity buy also helps to reduce the large number of suppliers currently in use and ensures the Navy is getting the best value for our dollars. While this action addresses the in-service aspect of driving to commonality, we are also actively invoking the common parts catalogue in our new construction contracts. This common parts catalogue is a critical step in an effort to tackle HM&E standardization. Historically, the Navy affects an average of 360,000 HM&E equipment
installations per year which represents a range of 37 ,000 pieces of unique gear. On surface ships we’ve recently agreed to go to a common door configuration. We continue to work these common parts on a daily basis.

We plan to increase commonality for the Next Navy by reducing the number of ship types; utilizing existing Navy systems on new designs; using adaptive infrastructures to allow technology to evolve without a physical impact to the ship; leveraging commercial technology; increasing modularity; increasing Open Architecture; adopting Class Common Equipment; and developing a common specification for an integrated product data environment.
The goal of all these initiatives is to minimize variance within the systems to reduce cost, schedule, and risk. Overall, the Navy is moving towards a warfighting capability-based approach rather than platform-centric approach. This means that Navy develops specific capability and functionality for use Enterprise-wide vice expending additional resources developing multiple systems that provide the same capability but are targeted to only one class of ships.

For the Next Navy, Test and Evaluation savings could also be realized if common products were tested once vice on every platform. The Navy has devised an Enterprise Test and Evaluation strategy to eliminate redundant testing of common systems that is being implemented today. Simulated design analysis on VA Class eliminated the need for actual Shock Trials- saving $70M. I believe the T &E area is rich for cost reduction efforts. Commonality is also driving the use of open systems architecture and modularity. The Navy plans to reduce the number of surface ship combat systems baselines from sixteen to five by 2025 through open architecture. The ARCI model is often held up as the model to explore. And it has been a great model- we need to continue to refine it and challenge the way we do business to ensure we continue to realize savings.

Finally, the Next Navy can address commonality through ship design processes. We need to consider standard design tool interfaces such as implementing a CAD interface and keeping the end in mind as we develop technology, being mindful of not just producibility or acquisition cost, but Life Cycle Cost as well.

There are potential design opportunities on the horizon. Together with OSD and SOCOM, we have conducted an Alternative Material Solution Analysis, AM SA, to fill the capability gap because there is only one ASDS. The AMSA (similar to an AoA) is complete but the decision on how to proceed is still pending.

Another effort started this year is the planning for the Sea Based Strategic Deterrent (S BSD). The requirements for this effort are currently approved by CNO, and will be presented to the JROC in the next few months. The AoA will start later this year. And I’ll probably be the only speaker to say that a submarine delivered capability is only one of the capabilities being considered.

The Underwater Launch Missile System (ULMS) effort is integral to Sea Base Strategic Detercnt. Design efforts arc being discussed with United Kingdom Royal Navy to coincide with their need to replace their VAN GUARD class submarines.

So you may be wondering- so what does she want from the submarine technology community. I want you to be cognizant of all the activity that is going on today and to understand how we are positioning ourselves for the future. As technologies arc being developed for future and current applications it is imperative that you understand the cost implications of developing, fielding, and maintaining these technologies. There must be a compelling business case for every technology considered as part of the VA Class Block III design, the Sea Based Strategic Deterrent, or in
planning on the son of VA Class. Understanding the cost implications is vital in moving forward. I’m not saying that the Navy won’t make investments in technologies that give us a technological edge or fill a warfighting gap but I am saying that the costs of any new technology must be clearly understood. And developing technology
that is on the cusp of transitioning, yet never does, must be watched. In the words of the great singer, Kenny Rogers, “know when to fold ’em, know when to walk away, and know when to run.” Don’t be afraid of saying “this is good technology but there are no near term applications.” We can always document the work done to date and revisit at a later time. As you develop technology, don’t live in isolation. Understand the needs of the surface side of
our Navy and sec if technologies can be leveraged- I know they can. In fact, the AC plants developed for VA Class arc scaled up and being installed on LHA 6 and DDG 1000. The fact the Navy didn’t have to invest three times is a good thing! And where possible, understand international technologies. I understand you live in a world of NOFORN but we live in a global environment and there arc international applications that may be attractive.

There is a considerable amount of R&D devoted to submarine technologies. In the FY09 budget there is over $490M set aside for Team Sub R&D efforts and over S60M in ON R funding for submarine technologies. We need to ensure that the correct technologies are being pursued and resource them properly. If you haven’t figured out yet- I’m very conscious about the dollars. In this resource constrained world we must be vigilant.

There arc some on-going submarine initiatives that arc allowing the Navy to be better positioned for the future. The TANGO BRAVO initiative is demonstrating the feasibility of technology concepts that reduce costs while maintaining the current capability of the VIRGINIA Class submarines. Three concepts currently being evaluated arc shaftlcss propulsion, external weapons, and a broader use of electric actuators. These evaluations arc on track to produce measurable results and future savings once implemented.

This is an exciting time for submarine programs. Sea Base Strategic Detcrent may enable current Tango Bravo and other R&D efforts to enhance the future submarine fleet. It is a dynamic time in Navy shipbuilding. We have a lot of new surface ship and submarine designs on the drawing board or in the conceptual stage. We’ve been through the lead ship pain on the VIRGINIA Class and arc applying the lessons learned to other ship classes. While the current VIRGIN IA success isn’t in the limelight right now, the submarine community must continue to press for the
2 for 4 in 12 goals or we may be in the limelight again.

The Navy needs at least 313 ships in 2020 to meet our warfighting needs. New technology should be developed to address warfighting gaps and not be developed for technology sake. Our job is to help procure and deliver these ships in the most cost effective manner. If there arc good ideas that you haven’t heard discussed, I’d love to hear from you. Thank you for commitment and support for all our shipbuilding programs, especially the submarine
portfolio. Again , thank you for inviting me to speak to you today and I welcome your comments and questions.

Naval Submarine League

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