Editor’s Note: Mr. O’Rourke is the very respected observer of Naval Affairs for the Congressional Research Service. He has graciously consented to address The Submarine Technology Symposium for a number of years. His views have consistently been very valuable to the submarine community.
Thank you for the introduction. It’s great to be back here, and I very much appreciate the opportunity to speak to you today. I remain impressed by the submarine community’s continued willingness to listen to challenging points of view. Organizations that do so, I think, are better off in the long run. As always, I should state at the outset that these views are my own and do not necessarily reflect those of my employer.
Changes in the Arctic
In addition to the kinds of issues I usually speak about at this symposium, I was asked this year to make a few comments about the changing situation in the Arctic, because CRS recently came out with a report on the topic that I coordinated. So let me start with that.
The diminishment of Arctic sea ice is prompting increased human activities in the Arctic, and raising a Jot of questions about the region’s future. There’s interest on the Hill about this, and the new CRS report is intended to respond to that interest by providing an introductory overview of some Arctic-related issues, including the issue of potential implications for U.S. military forces.
For this symposium, one of the things that’s notable in the public discussion of the potential implications for U.S. military forces is how little mention there is of submarines. The discussion focuses mainly on how the diminishment of Arctic sea ice is opening up potential new operating areas for Navy and Coast Guard surface ships, and how the two services are exploring what changing conditions in the Arctic might mean for future surface ship and aircraft operations in the region.
The relative lack of mention of submarines is quite a change from the Cold War, when submarines were a big part of the discussion about U.S. military forces in the Arctic. Whether this change should be a concern for the submarine community, and if so, what the submarine community might do to raise its profile in that discussion, is something that submarine supporters might want to examine.
The Navy at the moment isn’t racing ahead with major new investments to support increased surface ship and aircraft operations in the Arctic. But it’s studying what changing conditions in the Arctic might mean for future required capabilities, and those studies could eventually lead to some investments.
The submarine community may want to ensure that its views are heard in that process, particularly in terms of how submarines might contribute to Arctic domain awareness and Arctic environmental observation and forecasting, which are gap items called out in the QDR.
Converting more Ohio-class boats into SSGNs
I was also asked to comment on the possibility of converting more of the Ohio-class boats into SSGNs. The final report on the 2010 Nuclear Posture Review suggests that the 13th and 14th Ohioclass SSBNs might be released from SSBN duty following the completion of the mid-life refueling overhauls on the first 12 Ohio-class SSBNs. If this were to happen, it would create a clear opportunity for converting the 13th and 14th Ohio-class SSBNs into two additional SSGNs, which would help mitigate the projected attack submarine shortfall. This in my view is a significant potential opportunity for the attack boat community to watch for.
Modernizing existing attack submarines
I want to switch very briefly to the topic of the modernization of in-service attack submarines, and specifically the ARCI program. I recently received an update briefing that reminded me just how much this program is improving the capabilities of the existing attack boat fleet. Indeed, given the improvements in mission capabilities that are realized through this program, it’s not too much of an exaggeration to say that, in some ways at least, the impact of this program is almost equivalent to adding boats to the fleet. Among the many efforts underway in DOD to improve the capabilities of existing platforms, I would be surprised if this one did not rank among the most dramatic. It’s therefore surprising to me that the ARCI program doesn’t get more attention. As an example of an open architecture approach that is achieving substantial gains in capability within limited resources, I find it
curious that this program isn’t highlighted more often.
Attack submarine procurement in 30-year shipbuilding plan
Let me turn now to the new 30-year shipbuilding plan that was submitted in February along with the budget request. In terms of submarines, a lot of the discussion about the new 30-year plan has focused on the Ohio replacement boats, which I’ll get to in a moment. There’s also been discussion of how the shipbuilding plan maintains the two-per-year rate for the Virginia class through the end of the FYDP. Less attention, by contrast, has been paid to
what happened to the attack submarine line in the years after the FYDP. What happened is this: Compared to the previous 30-year plan, the new 30-year plan contains 9 fewer attack boats- a total of 44 vs. 53 in the previous plan. That’s a reduction of about 17%, or about one out of every 6 boats that were there previously. This reduction converts the projected attack submarine shortfall from the bathtub shape that we’ve been familiar with into one that’s more open-ended in the sense that it doesn’t get back up to 48 boats by the end of the 30-year period. That’s a significant change- and one that has not, in my view, received as much attention as it might warrant. It’s also significant for the submarine community- for reasons I’ll get into later- that this new 30-year plan shows a significant shortfall in the cruiser-destroyer force that was not in the previous plan.
Ohio replacement program – SSBN(X)
Let me turn now to the main event for my address today, which is the Ohio replacement program. Not long after starting my work at CRS in 1984, there was an article on the Seawolf program in the defense trade press that quoted someone as saying, “If you want to gather a crowd in Washington, just say you’re designing a submarine.”1 It’s a quote, I think, that has withstood the test of time, because the crowd has now gathered for the Ohio replacement program. Various observers are concerned about the potential cost of this program and the impact it may have on the amount of funding available for other shipbuilding programs. Indeed, for many observers, this is probably the leading issue regarding the program. The Navy’s report on the 30-year shipbuilding plan acknowledges the issue, and shows reductions in other shipbuilding programs in the years when the Ohio replacement boats are being procured.
Potential impact on other shipbuilding
Even so, there are reasons to think that the program’s impact on other shipbuilding programs could be even greater than what is shown in the 30-year plan. One of these reasons concerns the unit procurement cost of the boats, which the Navy estimates preliminarily at $6 billion to $7 billion. My CBO counterpart, Eric Labs, is currently completing CBO’s independent estimate of the cost of the 30-year shipbuilding plan, and as a part of that, CBO is developing its own estimate of the unit procurement cost of the Ohio replacement boats. Given past differences between CBO and the Navy on such matters, I don’t think anyone should be surprised if CBO’s estimate is higher than the Navy’s.
A second reason for concern relates to the profile in the 30- year plan for the level of shipbuilding funding. The profile shows the shipbuilding budget increasing by about $2 billion per year in constant dollars in the middle years of the plan- the years during which the Ohio replacement boats are to be procured. Putting that $2-billion-per-year hump in the profile pennitted the Navy to avoid showing even deeper reductions for other types of ships in the years when the Ohio replacement boats are procured. There’s little in the 30-year plan, however, to explain how the Navy will be able to increase the shipbuilding budget by $2 billion per year during those years. Indeed, DOD and Navy leaders are now warning others to expect no substantial real increases in the shipbuilding budget in coming years. So right now, that extra $2 billion a year looks like magic money.
And a third reason concerns the change in the country’s finances looking forward that has occurred as a result of the late-’08 financial crisis and subsequent events. I think you have all seen by now the size of the budget deficits that are now projected for the next several years, and the associated projected increase in the debt-to-GDP ratio. CBO is projecting that the debt as a percent of GDP, which is currently about 63%, will grow to 87% in 2019, when the first Ohio replacement boat is to be procured, and reach 90% the following year.
Although we’ve all seen these projections in recent months, I’m not sure the system has fully internalized what they could mean for the defense establishment. Preventing this projected increase in debt as a percent of GDP could force a major rethinking of what we can afford to do as a nation, including in defense. It could lead to a significant real decline in the defense top line, and within that, the Navy top line and the size of the shipbuilding budget.
11 at-risk Virginias
When I look at these three factors, my first conclusion is that it appears unlikely that the Navy would be able to procure two attack boats in the same year that it procures an Ohio replacement boat, even if a part of the cost of that Ohio replacement boat is deferred to the following year, as appears to be the assumption in the 30-year plan. Since the Ohio replacement boat will cost more than twice what a Virginia-class boat costs, getting two Virginias while also paying for something approaching one-half the cost of an Ohio replacement boat is like procuring three Virginias, and few people would argue that a shipbuilding budget about the same size as today’s in real tenns, or smaller, would support that without causing unacceptable reductions in other shipbuilding programs. Since there are two years in the 30-year plan that show two Virginias in the same year as an Ohio replacement boat, one might conclude that the second Virginia in each of those two years is not likely to happen.
By the same token, it might also be difficult for the Navy to procure even one Virginia in the same year that it procures an Ohio replacement boat, if the Ohio replacement boat needs to be fully funded in the year it is procured. There are as many as nine years in the 30-year plan that might fit that description. That’s another nine Virginias that might not happen.
So the total number of Virginias that are at some risk of not happening is about 11, or about one quarter of the total number of attack boats in the plan. If those 11 boats fall out of the plan, the attack boat force might decline to 34 by the final years of the 30- year plan. And even if a way is found to put about half of those 11 boats back into the plan, the attack boat force would still number 40 or fewer in the latter years of the plan. At this point, submarine advocates could ask: Why should the Virginia class be the program that absorbs the cost impact of the Ohio replacement program? Why not some other shipbuilding program? h’s a fair question.
Cruisers and destroyers
This is where my earlier comment about cruisers and destroyers comes in. There are two categories of relatively expensive ships that the Navy tends to procure each year, year in and year out. One of them is attack submarines, and the other is cruisers and destroyers. Other types of ships are procured in some years but not others, or, in the case of the LCS, are Jess expensive. So if you want to pay for as many as 11 Virginias, it’s hard to do that
without reducing funding for cruisers and destroyers.
Arguing in favor of a reduction in the cruiser-destroyer line would not be such an easy thing, for two reasons. First, the cruiser-destroyer community has taken a lot of cost out of its plan by canceling the CG(X) cruiser in favor of the Flight Ill DDG-51. The Flight III DDG-51 might not be the ship the surface community would prefer if it had its druthers. It won’t have the capabilities of a CG(X), but it’s a lot Jess expensive, and the surface Navy has decided that it’ll be enough to get the mission done.
Second, even after taking a Jot of cost out of the cruiserdestroyer line by canceling the CG(X), the 30-year plan still doesn’t include nearly enough destroyers to maintain the cruiserdestroyer force at the required level of 88 ships. The force is projected to decline well below that number in the final years of the plan. In short, in terms of both cancelling the CG(X) and facing a force-level projection that drops well below required levels, supporters of cruisers and destroyers will be able to argue that the surface community has already given at the altar, and should be spared further reductions.
Their argument could be reinforced by supporters of the shipyards that build surface ships of all kinds, who could argue that while submarine production can be sustained by one Ohio replacement boat per year, reducing funding for surface ships so as to permit procurement of Virginia-class and Ohio replacement boats at the same time could force one or more of the surf ace yards to drop below minimum sustainable levels of work.
I don’t want to rule out the possibility that reductions in a combination of surface ship programs might free up enough funding to procure some of those 11 at-risk Virginias. That’s why I spoke a minute ago about the possibility of recovering maybe half of those 11 boats. But this scenario might represent a best case view.
Options for addressing the situation
So, if this is the situation we’re looking at, what are some options for addressing it? I want to spend a few minutes going through some.
One of them would be to open a debate about the value of naval forces relative to other military forces in defending the nation’s interests in the years ahead, so as to support an eventual shift in DOD budget shares to the Navy. This option faces headwinds. Current operations in Iraq and Afghanistan, for one thing, tend to focus attention on the value and needs of the ground forces, and not the Navy. In addition, making a case for a larger Navy share of the DOD top line might require more explicit public discussion of China’s military modernization
effort, which is something the executive branch doesn’t seem too interested in. And the federal budget situation I mentioned earlier might lead to a reduction in DOD top line, which could offset some or all of the effect of gaining a larger share of that top line.
Another option that has been mentioned in hearings this year would be to fund the Ohio replacement boats outside the shipbuilding budget- for example, in a newly created strategic forces investment account. There’s some precedent for such an arrangement in the National Sealift Defense Fund, where DOD sealift ships and Navy auxiliaries are now funded, and in the way in which most BMD acquisition programs are funded through the
Defense-Wide R&D account rather than service R&D and procurement of accounts. Skeptics, however, might argue that this option might not result in additional funding for the procurement attack submarines or other kinds of Navy ships, because the funding for the Ohio replacement boats might simply be moved out of the shipbuilding account along with the boats themselves.
Two more options would be to transfer the detailed design costs of the Ohio replacement program, and the nuclear fuel core costs of the boats, from the shipbuilding account to other Navy accounts, so as to reduce the procurement cost of the Ohio replacement boats, and particularly that of the lead boat, as they appear in the shipbuilding budget. Doing this, however, would reduce the procurement cost of the follow-on boats by only a few percentage points, and would put added pressure on the receiving budget accounts.
An additional option that I have outlined in my CRS report on the program would be to spread out the funding profile for the Ohio replacement program by starting procurement two years earlier than currently planned, and ending it two years later than currently planned. The boats funded ahead of the current schedule would still be executed as if they were funded on the current schedule, and executing the final boats in the program a year or two later than currently planned might depend on the Navy being able to extend the service lives of the final Ohio class boats by one or two years. This option would not reduce the total procurement cost of the Ohio replacement program, and might even increase it somewhat by reducing the rate of learning in the program. But it could permit a greater use of incremental funding in the program, which could reduce the program’s impact on other Navy shipbuilding programs in certain years.
Reducing procurement cost of Ohio replacement boats
Three more options would aim at reducing the procurement cost of the Ohio replacement boats themselves.
One of them would be to avoid cost-increasing features in the boat’s design that are not necessary to meet the boats’ threshold operational requirements. I’m not sure how many opportunities there might be in the boat’s design for doing this, but the submarine community will likely be pressured to show that all such opportunities are being pursued. This option could preclude using the Ohio replacement program as an engine for developing technologies that might benefit downstream submarine designs.
A second option for reducing the procurement cost of the Ohio replacement boats would be to increase the program’s R&D funding, in order to mature any technologies whose development is not currently in the program’s funding plan, but which if matured and incorporated into the boat’s design, could reduce its procurement cost. This option would increase the program’s neartenn cost and technical risk in return for the promise of a downstream benefit in reducing recurring production cost. Again, I’m not sure how many opportunities there might be in this regard.
A smaller boat with a smaller missile
And a third option for reducing the boat’s procurement cost that has been mentioned in hearings this year would be to design the boat around a missile that is substantially smaller than the D-5. Such a boat could be a variant of the Virginia class design, or an entirely new design. The smaller missile could be a C-4-sized missile, or a missile of a different size that is nevertheless substantially smaller than a D-5. I want to spend a few moments
focusing on this option.
In connection with this option, the Navy has stated that no C4 missiles are available for refurbishment because only a limited number of C-4 rocket motors remain. The Navy also states that C4 missile hardware, including equipment sections, nozzles, and avionics, has been destroyed or disposed of.2 The Navy’s D-5 life extension program, however, involves the procurement of D-5 missile motors, as well as other critical components, and also includes the redesign of the guidance system and missile electronics, which must be replaced to support the extended service tife.3 Given the kind of work entailed in the D-5 life extension program, the Navy may need to provide some more details on how many C-4 missiles remain in existence, and what the feasibility and cost would be to make C-4s ready for use on a Ohio replacement boat.
Regarding the idea of producing new C-4s, and updating their guidance systems to make them more accurate, I imagine that most or all of the C-4 production tooling has been disposed of. But that doesn’t mean it couldn’t be reestablished. Even with the cost of reestablishing the production tooting and updating the guidance system, the total cost of a smaller boat with new-production C-4s might be less than that of a larger boat armed with life-extended D-5s. The Navy may need to provide more details on the costs associated with producing new C-4s with updated guidance systems.
The Navy has stated that it studied various Virginia-based design options, and concluded that a Virginia-based design would have technical and operational shortcomings and risks.4 It’s not surprising that a Virginia-based design would have shortcomings, but the Navy may need to provide some additional infonnation on what these shortcomings are, and why they would be showstoppers in tenns of perfonning the mission. And while a Virginiabased design might pose risks, the Navy’s anticipated new design would pose some risks as well. The Navy may need to clarify exactly what Virginia-based options it has studied- including whether any of these options were designed around a C-4-sized missile-and what the technical and operational shortcomings and risks of these designs were. A new-design boat designed around a smaller missile might lack some of the technical and operational shortcomings and risks of a Virginia-based design. It’s not clear whether the Navy has studied a new-design boat designed around a smaller missile. I imagine the Navy has not studied this option in detail, since the program’s baseline intention was to design a submarine capable of launching the D-5. If so, it might clarify matters for the Navy to examine and report on what this option might look like.
Costs and capabilities
Given the costs to acquire a smaller missile, and particularly to develop one, I don’t know for certain whether the combined cost of a smaller boat and a smaller missile would be less than the combined cost of a larger boat anned with life-extended D-5s. But the Navy doesn’t know that for certain either, in part because the Navy has not estimated the cost of developing a smaller missile.$ The Navy should know what these comparative costs are, and be
ready to show them to others. If it happens to tum out that the combined cost of a smaller boat and a smaller missile is less than that of a larger boat with life-extended D-5s, then the follow-on task would be to examine
the differences in capabilities between the two options, particularly those stemming from the reduced range/payload of the smaller missile. A boat with a smaller missile would likely have substantially less nuclear deterrent capability. The question would then become one of examining requirements for the nuclear deterrence mission in coming years, which might or might not be the same as what they have been in past years, and determining
whether a boat with a smaller missile could meet those requirements. The impact on the UK successor SSBN program would also need to be examined.
For the submarine community, it might seem late in the game for others to be raising the question of a smaller boat with a smaller missile, because a Jot of work has already occurred on the program, particularly in the form of the Analysis of Alternatives (AOA) for the program. But these other observers haven’t yet seen the AOA.
In addition, the Ohio replacement program has its roots in developments that occurred prior to the financial crisis of late-’08. In light of the change in the nation’s finances that has occurred since that time, and the potential impact of the Ohio replacement program on programs for building other ships, including attack submarines, it might not be unreasonable to examine whether the founding precepts of the Ohio replacement program remain valid. This is part of what I meant when I said earlier that I’m not sure the system has fully internalized what the changed financial projections could mean for the defense establishment.
I’m not arguing for or against any particular design option for the Ohio replacement boats. What I’m instead suggesting is that it might be helpful if the program were to proceed on the basis of a
full understanding by all stakeholders, both inside the Navy and elsewhere, of the relative costs, capabilities, and risks of all plausible options for this program, particularly in light of the budget circumstances that have developed over the last year and a half.
If, in the end, an Ohio replacement boat armed with lifeextended D-5s is the best solution, then there are some remaining options that might be examined for addressing the scenario of an attack submarine force that could be reduced to 40 or fewer boats.
One of these would be homeporting more attack boats in forward locations like Guam or Hawaii. Another would be dualcrewing of attack boats. And a third would be service life extensions for the 23 Improved 688s. And here, I’m talking not about an extension of a few months to two years, as was discussed by the Navy a few years ago as a means of mitigating what was then the bathtub-shaped attack boat shortfall. I’m talking instead of service life extensions on the order of I 0 years or more, which would require refueling the boats.
I understand that it’s not clear whether such a thing would even be feasible, due in part to the question of whether the pressure hull could last that long. And even if it were feasible, it would likely be expensive in terms of the cost for each year of additional service life gained. But if things like additional forward homeporting and dual crewing are not enough to make do with an attack boat force of 40 or fewer boats, it would be prudent to explore this option, so that the submarine community can be certain about its feasibility and costs, and be prepared to show this to others.
And if it turns out that the option is just not feasible, and that forward homeporting and dual crewing are not enough to make do with an attack boat force of 40 or fewer boats, then I’ll give you one more option that might go down a little easier, since it relates to another part of the Navy, and that would be to significantly extend the service lives of surface ships, particularly the 22 Aegis cruisers and the 28 Flight I and II DDG-51 s. The 30-year shipbuilding plan calls for operating these ships to age 35. The idea here would be to extend their lives to something like 45 years, so as to defer the need for procuring their replacements until after the Ohio replacement boats are funded. That might make it easier to put more of those 11 at-risk Virginias back into the budget, and bring the attack boat force closer to 48 boats.
Extending the service lives of these cruisers and destroyers to something like 45 years would have a substantial cost, and it would pose some technical challenges. But it would not present some of the feasibility issues associated with extending the Improved 688s beyond 40 years. So a final option that submarine supporters might consider would be to begin thinking of the Aegis cruisers and the Flight l and II DDG-51 s as their new best friends.
This would entail encouraging the Navy to begin planning for the Service Life Extension Program (SLEP) of these ships, and for treating these ships well in terms of maintenance funding between now and the time that they would undergo their SLEP overhauls.
As you can see, I’m trying to think through the various aspects of the situation I have outlined today concerning the impact of the Ohio replacement program on other shipbuilding programs, and particularly the Virginia-class program. l think we all need to do this, and that, in light of the shift in the nation’s finances that has developed over the last year and a half, this effort should include the examination of options that previously were not considered necessary to examine. Hoping for the best is not a plan, and the risks of doing only that might now be particularly great, given the new budget situation. l hope that, in these remarks, I have given you a few ideas to pursue, as we try to work our way through this.