captions copyright national cable satellite corp. 2008 i know the cuts are already undertaking are very significant, and sequester would be catastrophic to the defense department, but it remains the haw. sequester is the law and will remain in effect unless congress takes action. and i don't know if it would be that easy to fix it. i just want to tell you, i think the president and the white house team and the defense department team needs to be thinking about what we can do, because i for one do not intend to eliminate the sequester totally as the present budget basically does. i think we'll have to find cuts in other programs in the

remaining 60 plus percent of the budget that's been protected from any cuts, that needs to take some -- that's where we need to find some savings, too. it can't all come from the defense department. but that's a complex matter. i just would warn you that we're heading to that time and it did be a problem if we don't have a real solid plan to get out of it. with regard to navy shipbuilding, the plan -- you got a fourth quarter assessment coming up, mr. secretary, and you stated you intend to reach an inventory of 50 ships by 2019. would this assessment, how confident are you that it will maintain that a goal based on the budget and other things? do you expect that the committee, the assessment group, could come back and recommend even less than 300 ships?

>> i don't know what the for-structure assessment will come back, mr. senator. but i feel confident having a fleet of 300 ships, around 300 ships, will meet whatever ass s assessment or whatever strategy drives the assessment. we do have the plan as you pointed out to get to 300 ships by 2019. >> well, one thing about it, i may not be here and you may not be here in 2019, so plan when they get out too far don't have much reality to them and that's what worries me. i mean, we had a plan to have 316 ships and did have that many in 2001. when you took office, it had dropped to 283. we've also taken as you noted from your remarks, we'd gone

down 49,000 sailors. some of that is because we use better equipment, better ships that need fewer people to man them. and i give the navy credit for that, ad to do like everyone el, see how we can do these things better. with regard to the literal combat ship, i'm concerned about the overall reductions in that budget in the future years of the defense plan. remains a top navy priority to have 55 ships produced through that program. where are we in terms of cost and schedule for the lcs, mr. secretary, or admiral, how does the current contract, the execution of the program compare with the initial purchase of the first ship you see that program developing? >> senator, i'm very proud of the combat ship program. the first ships of bonts

came in as lead ships through very expensive, very high priced. >> first in class is always more expensive. >> it is. >> what does it look like now? >> the price has come down from the bids on the -- on ships five, six and seven. the bids -- the initial bids, the price has come down from that by about 40%. and the price is coming down for every ship in this contract. we have a block buy of ten ships from each vendor, so a total of 20 ships. the tenth ship of each one will be significantly less expensive than the first ship. these are all fixed-price contracts, so we're certain that we will -- we will reap these savings. we were able to get 20 ships

instead of 19 as originally planned and save $2.9 billion. both shipyards are performing very well. the ships themselves as cno has mentioned going to be one of the very important parts of the navy going forward. we're planning to forward deploy lcss to singapore. the first one next year in a proof of concept. and then on a -- on a more regular and permanent basis in the 2015 time frame. so, we remain absolutely committed not only to the platform but to buying out the entire 55. for purely budgetary reasons, we had to slide two at the end of this five-year plan to make the buying the entire class of 55

ships as quickly as we can. >> briefly, general amos, there's an lcs provide benefit for the marine corps? >> senator, it could. there's been discussion about w marine module. we've not done anything with it yet, but i think the possibilities are there, absolutely. >> admiral, do you have any comments on that ship line? >> well, combined with the mission module, it will -- it will be a quantum leap, and we kind of mow the grass, finding mines, locating them, neutralizing. what we'll be able to do with this at the same time find them, localize them, and neutralize them with unmanned vehicles, and the volume will be three times the volume that we have today. so, as we look at the that we consider today, the strait of hormuz and otherwise,

imagine the capability enhan enhancement. >> i know we're facing a lot of challenges with regard to the navy plans and the defense department plans, less air force planes, less prepositioning squadrons for the marines and also less joint ic vessels. i'll submit you a written question. my time is up about the joint high speed vessel, but it's been a very popular ship, has it not, admiral greenert, by the commanders who benefitted from it? >> it has. it's the west tac express is what it's kind of based on, so it's been quite successful. >> it is being reduced. maybe we can examine that. what are your thoughts about that? >> well, the -- what we -- we looked at that and said, hey, i think we need 21. what if we crew it with marly time sealift command people because they operate 270 days a

year instead of sailors 180. with that it's become 16 requirements to provide the same presence. we said if we operate these forward, if we forward station them, they're there. we can do that. we can get -- we can get by with ten. we did a study on that, and that's where the ten comes from, and that's how that worked its way in that direction. subject to change in the world strategy, we think we're good with ten and so do the commanders, sir? thank you. thank you, mr. chairman. >> thank you very much, senator sessions. senator reid? >> thank you, chairman. thank you, gentlemen, to your service to the nation and the naval services. admiral greenert, your budget includes, and secretary mabus, it includes a proposed delay of the ohio class submarine by two years. and last year the navy testified that they needed the original schedule to maintain strategic deterrence parole requirements,

which begs the question, if this postponement is in effect, can you maintain the level of strategic patrolling during the transition from the ohio class to the new class? admiral greenert? >> today, senator, we have 14 ohio-class submarines. two are in overhaul, so that leaves us with 12 really operationally and with that there are ten or nine available at any given time for strategic command. we feel during this -- due to this delay, we will ride a period where we'll have ten operational, sometimes nine. so, we'll have a similar risk there. we have to watch it very closely, because at that time frame, in that future, we're talking the late '20s and the t '30s, we'll have older ohio so we have to watch it carefully, right now we think we can mitigate that risk. >> and in -- in thinking forward, what assumptions are you making? because, you know, frankly you pointed out with the age of the

fleet if you're assuming sort of standard operational availability, that assumption might not be a very good one. so, are you making any heroic assumptions that fill the gap on paper? >> well, being navy, we don't try to be heroic. >> you're heroes. >> but the long-term will be complete on the class at that time, so we were comfortable about that, but we'll have shaken all that down. so far the returns on the extension of the ohio class, because that's what we're talking about in that time frame, are good and we have to pay attention to the seawater systems, the hull measurements and the reactor plant components which are subjected to neutron irradiation. we've done it before. that is the process, but not on this class of ship. the returns are good so far. we must be vigilant. >> let me ask another related

question and we've touched upon it in some private meetings. and the ohio replacement is part of the broader issue of the nuclear triad which for both strategic reasons and economic reasons is going to have to go on to significant re-evaluation. it seems to me, as i said before, that given the historic relative invulnerability of submarines, missile submarines, and given the fact that this is really the only new strategic system that is being planned actively and funding being afforded to it, delaying it might have implications for the overall triad in terms of how do we maintain it, particularly as we find ourselves on the air and land side with not enough assets or -- so, this raises a huge

question. i don't know if you have any comments today on that topic. >> that's a good question. we looked at the force structure, the nuclear strategic force structure, icbms, the bombers and submarines, so the two-year delay is not -- we're comfortable with that in the department with what we have to deliver as it stands today. now, as you know, there's a study under way, nuclear -- post nuclear posturing study, subject to -- pending the results of that, we're comfortable. but we need to bring the ohio replacement in. it's important. it's the survivable piece of the triad as you said and the department's been pretty clear on that to us in general. >> changing subjects from ballistic missile submarines to attack submarines, a constant theme, the virginia class within your budget is doing two year, and i thank you, gentlemen, and your predecessors, you know, for

working that, it took many years, but we're slipping one or both. and that causes problems. it causes problems i think in the overhaul course of the program. and let me ask either the secretary or the cno whether you would concur that would add additional cost to the program over time, and then what steps you might take to mitigate, for example, if we could include an additional ship in the multiyear contracts, allowing long-term purchases. that might be the most effective way to deal with that. so, either the cno or -- >> there's an operational cost that i'll quickly allude to. there's the requirements of the global combat and commanders and we have a deficit in the 20s and 30s. this will exacerbate that by moving the boat from 14 to 18. that's regrettable. 14 was a hard year for us. we retired ships early in that year, more than any other year in the fitup, so if we could

work a procurement process using a fiscal arrangement where we could -- and we will ask for multiyear procurement in that class as we stated earlier. we'll ask for a block buy. and we have good data on our block buy where we have saved substantial amounts of money. it's the most efficient. as you alluded to, the workforce learning curve is high. the venders are good. everything comes about, and we're getting these submarines in early. if we could find a way to incrementally fund this, we believe there's -- we are confident there's substantial savings and we would get a tenth boat for less than a notional cost, so there would be a cost savings in terms of doing this contractual rearrangement. and there's also the operational cost you'll have to bear because you just don't have enough ships capable -- so there's two xors s courses that can be mitigated by this, is that correct?

>> yes, sir, there's a capability and cost factor in these. >> and i presume that industry is seriously engaged with you to try to find a reasonable way to get this done. mr. secretary, do you want to comment? >> yes. we're working with industry. we're working to try to find innovative ways to fund this so that we can meet the mategation that you a mitigation that you and the cno have talked about. >> thank you, my time is up. you look great. i wish i looked that good without an operation, so keep up. tell those marines to keep doing. thank you, sir. >> thank you, senator reid. senator wicker. >> thank you very much. mr. secretary, i was very pleased to receive word the other day that a memorandum of agreement had been signed for the lha seven america class

amphibious ship, this very important for our future freedom of the seas as we leave -- well, as we draw down forces in some areas of the world and focus on the asia-pacific region. this will be a linchpin in the american force. i assume we will see that final contract concluded within a matter of weeks? >> senator, we anticipate that final contract before the end of april. >> excellent. thank you very much. well, let me ask you, then, both of you, secretary mabus and admiral greenert, about the -- about the shipbuilding industrial base. of course, your main concern is getting the job done, but we

also have to be concerned about the employment peaks and valleys that we may see. and i notice in your testimony, secretary mabus, we're not going to be back to 300 ships until 2019. the current fitup says we'll have new construction of 41 ships. this is a decrease of some 17 ships from the previous fitup. considering that and the fact that we're not going to even get within 13 ships of our requirement until 2019, what is that going to do to the so-called employment valleys? where employment at the shipyards is here and then it dips down, then we expect to be

able to come back and have the capacity to go up to a previous level. how's that going to play out? >> you're absolutely correct that the industrial base is one of the things, particularly in shipbuilding, that we have to protect. once we -- once you lose those unique skills, it's very hard to get them back when you need them. one of the things that, you know, in terms of that, we want to make sure that we have an industrial base that provides as much competition as possible so that you not only protect the industrial base, but we also protect the taxpayers in terms of how much money we pay for ships. today we have 37 ships under contract, which for -- i believe i'm correct here, all of our shipyards will keep them at a fairly steady, manning pace for

pa pascagoula, they have a dvg-51. they have the lha-7 that you pointed out. they have lpd-26, and they are -- we are in negotiations over lpd-27. and if you take all those and you project them forward, there's still going to be at any time in an industry like that some peaks and valleys, but we think we've smoothed it out the maximum percent that we can. in terms of our other shipbuild shipbuilders, we only have one yard that builds auxiliary. we have -- they now have in the current shipbuilding plan and in the fitup, a request for about

one ship per year, which will keep them stable. but we keep a close eye on the industrial base. and on the competition inside the industrial base. because sometimes one of the things that causes these peaks and valleys is not a welder out there. it's the overhead. it's the amount of money that the shipbuilder decides is necessary in terms of the support services. and we keep a close eye on this, and we expect shipbuilders to do the same. but you're absolutely correct in your concern for the industrial base, and we certainly share that concern. >> admiral, if sequestration kicks in, what's it going to do to what secretary mabus was just

talking about? and then, mr. secretary, i'll let you answer that question also. >> well, in this strategy one of the things we talk about is reversability, and that's the ability to ramp up if need be. but you have to have an industrial base to do that. in my view as sequestration kicks in, we will lose the capabilities that secretary mabus referred to in some shipyards. i don't know. if you do -- when i do rough math, i'm looking at not 285 ships, i'm looking at 230 ships. we don't have enough force structure to accrue that kind of savings without reducing procurement. so, i'm very concerned about an industrial base that would be able to adjust from that, from sequestration. and it would be very difficult to keep a shipbuilder that could be efficient in the types of ships we need. >> say that again about 230 ships. >> we have 285 ships today.

you do rough math, you look at the kind of numbers we talk about, and where i am today, you could end up, it's just simple straight-up application of math from where we are today, we could be around 235 ships. >> mr. secretary? >> well, sequestration has two big problems that there's been a lot of conversation about, a lot of testimony about before you. one is the amount. but second is how the -- how it is implemented without regard for strategy, without regard for priorities, and you simply have to take a certain percentage out of every account. it would be a big issue for shipyards like the cno says. it would also be a big issue because if we have to take a certain amount out of every

single program line, there's some contracts that we already have out there that we would have to -- we would have to take money from. and so for both reasons, the amount that is being reduced and the way that they're being reduced, i believe that secretary panetta describes it as catastrophic if that's --? thank you. >> thank you, senator. we're going to take a ten-minute break.

>> thank you very much, mr. chairman. i want to add my welcome and aloha to our panelists, and who i consider distinguished leaders of our country, and i want to thank you very much for your tireless efforts in leading the men and women of our navy and marines for our country. i also want to recognize and thank the military members and their families for their outstanding service. mr. secretary, it's always good to see you and speak with you. i always wish you well. in your written testimony, mr. secretary, you indicate the naval academy receives nearly

7,000 minority applications for the 2014 class, and it's double the number for the class of 2010. can you discuss what the navy's doing to achieve these significant gains as well as the benefits of a larger pipeline of qualified minority officers for the navy and marine corps? >> t y i will return the good wishes, and very good to see you. the naval academy has had an outreach program going now for several years to make sure that we get as diverse an applicant pool as is possible. we shouldn't allow -- everybody

should be accorded the honor of defending this country through military service. as you pointed out, the number of minority, not only applicants, but also acceptances has gone up dramatically. we have outside the academy taken action to make sure, for both the navy and the marine corps, that we are gathering in highly qualified, diverse background americans. not just diversity and ethnicity or national origin, but also in terms of geography, in terms of backgrounds, in terms of educational experience. because we believe that we will be a better fighting force having that diversity of points of view that we bring to bear on any issue. the final thing that -- well,

next to final thing that i would note is that we have also expanded naval rotc, returning it to some schools such as harvard, yale, columbia, where it had historically been, but where it had been absent for almost 40 years. we are returning it -- we are bringing naval rotc to other schools like arizona state and rutgers, to make sure that we do reach the widest population possible in that. and finally, the other thing that we've got to do in the military is not only get these young, diverse americans to sign up, but also to remain and make the navy and marine corps a career so that the diversity at our higher ranks will mirror the ones at our lower ranks. >> thank you very much, mr.

secretary. admiral? good to see you, too. and, first, i applaud the decision to fully fund ship and depot maintenance accounts. the navy is taking steps to improve maintenance work on its surface ships so as to mitigate problems in material readiness that has come to light in recent years. admiral, can you talk about some of the -- of these improvements, how these will -- these steps affect ship maintenance work, particul particularly pearl harbor and other shipyard as well. thanks. >> aloha, senator.

the biggest change is called the surface management engineering program, surf mep, we reininstituted it into the program. it lays out the key and critical maintenance procedures that need to take place when we bring a surface ship in for maintenance to assure that it gets to its expected service life. it involves going into the tanks, looking at the turbines, the shafts, the shaft seals. those long-term items that you might be tempted not to look at and that we didn't look at in the past, where we started finding emerging problems coming up. that's the biggest change. then it's to have the discipline to see to it that when we bring the ship in for maintenance that we get that work done. we have to man the shipyards such as pearl harbor so we have the right planners that can lay out what needs to take place so we're efficient whe