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Admiral Mies, thank you for that warm introduction. Admirals, Submarine League’s Board of Directors, and friends of the Submarine Force-it is a pleasure to share this evening with you. To the Corporate Benefactors, thank you for your ongoing support of the Submarine Force, the Naval Submarine League, and this event.

Tonight I will take the opportunity to highlight some of the nuclear fleet’s accomplishments over the last year. I will also give you an update on some of Naval Reactors’ major projects as well as provide an outlook for those projects based on the constraints of the Budget Control Act. Finally, I will address how the new defense strategy relates to the Submarine Force.

Operationally, the Submarine Force performed well across a range of operations. Our SSBNs completed 35 strategic deterrent patrols; our SSNs conducted 37 deployments and professionally executed 57 missions of significance to national security; and on any given day two-or-three SSGNs were deployed, bringing strike, surveillance, and special operations capabilities to the most worrisome hot spots around the world. Demand from the Combatant Commanders remains high, and there was no better advertising for the Submarine Force’s capabilities than our actions during the initial days of Operation Odyssey Dawn.

his past year, USS CALIFORNIA was added to the fleet, and with her christening in December, USS MISSISSIPPI is not far behind. However, as new submarines come online, we are making progress in the inactivation of the Los Angeles-class-having completed the refueling of USS MEMPHIS and USS PHILADELPHIA this past year.

Our shipyards have sustained the force with 14 major avail-abilities, to include refueling overhauls of USS PENNSYLVANIA and USS WEST VIRGINIA. Of course, I need to mention the significant work the industrial base accomplished to support the four CVN availabilities that occurred last year, including the efforts to complete the refueling overhaul of USS THEODORE ROOSEVELT (CVN 71 ).

Recruitment and retention for the nuclear Navy remained strong. This past year, we brought in 3,476 qualified officer and enlisted candidates, to include 17 women bound for our SSBN/SSGN force. For the women who started submarine training in 2010, 10 have already reported to their new commands. We continue to strengthen our relationships with the top engineering schools across the country. Last spring, Naval Reactors entered into a formal partnership with the University Engineering Alliance consisting of 11 schools across the Midwest with excellent engineering programs. This partnership has provided Naval Reactors with increased access to and enhanced visibility with the students at these schools, giving us direct interaction with university faculty, facilitated Navy nuclear presentations in the classroom, fostered the sponsorship of an annual summit, and allowed for curriculum reviews between Naval Reactors and the University Engineering Alliance schools. This partnership will give our future candidates a better foundation in nuclear education and do so cost-effectively by leveraging resources across the consortium.

Additionally in 2011, we were successful in leading strategic enterprise recruitment efforts that allowed our prime contractors, naval shipyards, and the Navy Recruiting Command to meet overall hiring demands of more than 1,800 engineers across the Program. Naval Reactors personnel visited over 70 percent of the Top 25 engineering schools across the country. Not only did we increase awareness of the entire spectrum of opportunities within the Naval Nuclear Propulsion Program, but we have seen improvement in the quality of candidates applying to various aspects of the Program.

Naval Reactors is entering a unique time in the Program’s history, and recent changes in the Federal Budget climate will challenge us even more. We have a tremendous amount of work to do in the next few years, and we cannot do it without the support of many of the industries represented here tonight.

The complexity and simultaneity of this work has only been matched during the early years of the Program. In addition to nuclear design and construction programs such as VIRGINIA, OHIO-class Replacement, and GERALD R. FORD which are well known and receive significant press coverage, lesser known projects such as the ramp up for the new 688-class Moored Training Ship Conversions to replace our aging training platforms in Charleston, the S8G Prototype Refueling Overhaul in New York, and the much needed recapitalization of our spent fuel handling facility in Idaho are not far behind. The stakes involved in what we have planned are high; this is truly bet the company type work. While daunting, the prospects for setting the course for the Program for the next 30-40 years are equally as exciting for me and I hope for you as well.

Focusing first on construction, MINNESOTA, NORTH DAKOTA, and JOHN WARNER are progressing smoothly. We started building SSNs 786 and 787 last year and will continue to start 2-per-year in 2012 and 2013. However, VIRGINIA is one of the programs that may feel the pressure constraints of the Budget Control Act, and we are all familiar with the impact this could have on the already troubling Submarine Force structure picture in the future. On the other hand, we are hoping to receive funding for the design of the VIRGINIA Payload Module which would keep the Submarine Force consistent with the new Defense Strategy’s recognition of the key role our undersea forces play in deterring our adversaries. While this is an important and needed capability, we would still need to be very focused on not only controlling costs, but reducing costs as we go down this road, because we cannot sacrifice hulls for added capability.

January 2011 marked the successful completion of Milestone A for the OHIO-class Replacement Program, which allowed for the transition into the Technology Development Phase. While we continue to tackle design challenges, I am confident that this future platform will deliver safe and effective combat capability while meeting warfighting needs in a cost conscious manner Similar to VIRGINIA, fiscal pressures could cause a construction start delay for the OHIO Replacement. Any delay in the construction start would cause a subsequent delay in the first patrol of OHIO Replacement, temporarily reducing SSBN force structure and challenging our ability to meet STRA TCOM requirements.

To manage this risk, we must seek every innovation and efficiency to drive out cost and ensure OHIO Replacement ships are delivered on or ahead of schedule with the requisite warfighting capability. This will allow us to maximize the availability of these assets which will enable us to meet the nation’s strategic deterrence requirements to the maximum extent possible.

Additionally, we are also in a teaming arrangement with the United Kingdom to share the design of a Common Missile Compartment. We must ensure that the design progression of the Common Missile Compartment remains on schedule to minimize impact to the United Kingdom’s Successor Program.

In the propulsion plant, we are leveraging the work we have done in VIRGINIA and FORD to simplify the design and reuse components where it makes sense. In those areas where we are striving for significant improvement in capability-core life and stealth-we are taking advantage of the body of knowledge the Program has developed over the last two decades to manage technical risk while controlling cost. For example, to address production scale manufacturing challenges associated with different materials, the core we use for the refueling of the SSG land-based prototype will represent all key technologies necessary to satisfy ourselves that we can successfully manufacture and meet the stringent specifications for a life-of-ship core in OHIO Replacement.

ext, the construction of our next generation nuclear aircraft carrier is over 33 percent complete. Over two-thirds of the ship’s structure has been erected and the first sections of FORD’s flight deck will be landed in the next few months. All of the major propulsion plant equipment has been delivered and installed, and the propulsion plant test program recently got underway with the first fluid system tests. The next major milestone for GERALD R . FORD will be christening and launch in the summer of 2013 with delivery in 2015. Delivery of FORD will restore the force structure to 11 operational carriers and when she deploys later this decade, she will embark over 1,000 fewer personnel than a NIMITZ-class carrier, saving the Navy over a hundred million dollars annually in operating costs.

As with all shipbuilding programs, affordability is the major focus area on FORD-class ships. ln the past several years we have seen large per-ship increases in the cost of government furnished equipment, materials, and labor. We need to do better work across all areas because we are our own bill payer, and we cannot afford the fleet we need.

As we all know, these great ships we are building cannot go to sea unless they have highly trained sailors to operate and maintain them. To this end, Naval Reactors is about to embark on a short duration, high intensity program that will convert two 688-class submarines into Moored Training Ships.

Last year, we completed most of the preliminary design work and have begun the necessary detailed design work in preparation to begin the conversion of USS LA JOLLA (SSN 701) in December 2014, making the platform available for student training at NPTU Charleston in late 2017. USS SAN FRANCISCO (SSN 711) will commence conversion in March 2017 with delivery in August 2019. Once converted, these former operational work horses will ensure our sailors develop early on the appropriate respect for our complex technology. In addition to the conversion program, Naval Reactors, for the first time, will replicate engine room watch stations to assist in the training of students, as we begin our transition from four to three critical training platforms.

As I mentioned in my discussion of ORP, the new core for the S8G Prototype will test new technologies in order to reduce manufacturing costs and increase core life in support of future applications including a life-of-the-ship core for the OHIO-class replacement platform. The S8G Prototype is on track to begin her 31-month refueling overhaul in September 2018 with a return to student training in 2021.

The last major program I will speak about tonight deals with the transfer and storage of spent nuclear fuel. Naval Reactors is planning for a substantial increase in refueling/refueling workload in the near future, driven mostly by NIMITZ-class refuelings continuing toe to heel, the LOS ANGELES-class coming off-line in increasing numbers, and the ENTERPRISE decommissioning at the end of this year.

In the past, I have discussed how Naval Reactors is using a multipronged approach to address the challenges we are facing in meeting our commitments to the State of Idaho where our spent nuclear fuel is processed, and I would like to provide some updates on what we are doing.

The first approach involved moving our spent fuel out of wet storage into dry canister storage. This past year, we loaded the 50th spent fuel canister into permanent dry storage at the Expended Core Facility. This means about one-third of the Navy’s existing fuel in Idaho is now in a spent fuel canister ready for off site shipment to a permanent storage facility.

The second approach deployed the new M-290 shipping container system that increases efficiency because it allows fuel assemblies to be transferred directly from an aircraft carrier without intermediate processing in the surface ship support barge. So far we have delivered the first four of 25 planned M-290 spent fuel shipping containers on-time and within the almost $600M budget to support efficiency improvements at Newport News Shipbuilding for carrier reactor servicing.

The final approach recapitalizes our Idaho facilities. Although the Expanded Core Facility continues to be maintained and operated in a safe and environmentally responsible manner, it no longer efficiently supports the nuclear Fleet. While key elements of the new design are being supported, we have been challenged in obtaining construction funding. Naval Reactors is reviewing the construction schedule and is developing mitigation plans. A primary goal of the mitigation plans will be reducing the additional cost the construction delay causes because we may be forced to procure additional M-290s each year the project is delayed.

Just like the aforementioned Program technical work represents both risk and reward for the Naval Nuclear Propulsion Program, the current strategic defense and fiscal environment represent both great opportunity as well as great challenge to our Navy, and more specifically, the nuclear fleet. As we have previously discussed in this forum, retrenchment from our ground wars coupled with a sustained desire of this country to remain influential globally calls out for flexible, forward, enduring naval capability as an arm of national power. Particularly in the Asia-Pacific region where the stakes of conflict are so high, the relevance of our allies so consequential, and the effects afforded by naval power so well suited, a strong Navy is, in fact, our asymmetric advantage. The recently published Defense Strategy clearly outlines a pivot toward the inherently maritime theater of operations, the Pacific, and provides the framework for shaping future budgets to address the needed force structure and capabilities. The Navy is very well positioned to address the Nation’s strategic, operational, and tactical thinking to address both reinforcements of ally relationships and deterrence of potential adversaries around the globe, and particularly in the Pacific. Our Nation’s senior leadership clearly recognizes this as it has been a very long time since the value of nuclear ships, both submarines and aircraft carriers, has been so broadly recognized and support for their construction and employment so deep. At the same time the challenges to get the resources we need to build, operate, and maintain our fleet cannot be underestimated. Pressure on defense spending will not subside and even the best supported programs will receive scrutiny and, likely, will pay some amount of “tax” as cuts are levied. We are no exception. As the FY 13 budget is unveiled and subsequent congressional debate unfolds, I suspect you will see both of these phenomena in play. I also suspect that as the budget pushing and shoving gets more intense and timelines toward decisions get shorter, that is not the time to have anyone questioning our relevance or stewardship of our resources. Accordingly, here are a couple of areas where we need to sustain our alignment and focus:

  • Continued operational excellence. As I mentioned earlier, our ships and sailors are doing some remarkable things in some very tough environments. You have provided them with superb capability and they have trained diligently to extract the most tactically from the ships and systems they employ. We have set the example of rapid, yet thoughtful deployment of technology. Our fleet leadership has set and maintained very high standards for operational proficiency. We cannot let up.
  • Importance of nuclear deterrence and the Navy’s unique role and responsibilities. Admiral Mies has spoken eloquently on this topic and there is significant churn as the Nation strives to sustain an aging stockpile, recapitalize an aging delivery platform, and define the role of nuclear deterrence in the security strategy. There is significant risk of making short term decisions, without full benefit of deep understanding of deterrence theory and strategy that will have long term, irreversible, negative consequences.
  • Excellence in program execution. The support we enjoy is in no small fashion the result of competent program management and execution. We have a legacy of on time, on budget, on quality delivery. That must continue, and it is not a given. We have challenges in the VIRGINIA and FORD programs that if not addressed will have dire consequences on our ability to protect future force structure. Similarly, cost challenges in the OHIO Replacement Program must be collaboratively addressed. Nearly every day I see some example of poor quality of technical work or a failure to consider opportunities to eliminate waste in our designs, solutions, and processes, none of which were birthed in intent or incompetence, but rather in complacency, overconfidence, or arrogance. Inexperience also plays a role as we are in the midst of an unprecedented demographic shift throughout the Program where very talented, but inexperienced young folks are replacing our experienced veterans who are retiring at increasing numbers. Supervisory attention is being directed more to backstopping. the deckplate technical work of our increasingly junior workforce at the expense of effective overall oversight and strategic direction. These are all vulnerabilities that we must address or suffer the consequence of failure.

I thank you again for allowing me to be part of this great event. I look out and see the faces of many who stood the watch and held the standard for many years. Our nuclear navy is strong today and has a bright future. I know that with your help we will continue down a path of safety and mission accomplishment from the design and construction of ships to the execution of our mission. Thank you for your contribution to the Program and our Nation. With that-I will be happy to take questions.

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