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news, chairman of the house subcommittee discusscusses ship building. pay gap. now this week in defense news with vago muradian. >> good morning. i'm vago muradian. is the security clearance the key to prospering in a bumpy u.s. economy. we went up to capitol hill this week to talk to gene taylor, mississippi democrat. when it comes to ship building taylor is one of the most powerful men in washington who represents a shipyard. he advocates nuclear power and i asked him why he thinks that is

a good idea. >> all a[inaudible] hubble's theory if not perfect is close to the fact that probably half of all of the -- half of all of the oil that is going to be found has been found. we did that in a short amount of time. now it will be a fight over the half that is left, that the price can only go up and the availability can only go down. one way around that is to where we can avoid petroleum-based fuels for our ships and we know we can do that with nuclear power. we've done it safely for decades with our nuclear aircraft carriers and nuclear submarines. a cruiser will use about 10 million gallons per shipper year. so over the 30-year life of that ship you're talking about 300 million gallons of fuel that you're not going to be buying from hug joe chavez or the ayatollah. we have to refuel every three to five days. that is the vulnerability.

when you go low, straight and slow, to refuel, that is the vulnerability. the carriers go for 30 years without having to refuel. but the ships that protect them have to refuel every three or five days. third one is every generation of ship uses about three times more electricity than the previous generation so you are building in that capacity early on with a nuclear plant. lastly, it has a smaller signature from a heat-seeking missile. when you combine all of those things it is the only way to go. >> the navy has roughly an $11 billion annual ship building budget. >> closer to 14. >> 14. >> and we need to get it up to 15. that is our goal for next year. >> which would be good news from the navy standpoint but nuclear powered vessels cost more to build. where will the money come from? >> it will have to come from the navy budget but the fuel is expensive and the cost of

getting the fuel to the ship is expensive. you have to have fuel farms, you have to have tankers that sail with the fleet. you have that vulnerability. again, 300 million gallons of fuel over the life of that ship is a heck of a lot of fuel. >> in submitting its budget to congress the navy omitted what is legally required a 30-year ship building plan. if the navy is not going to submit it, you said will you do one for them. what is the status of -- >> it is a combination of hopefully a fairly large five lcss and go back to the ddg the that really is the ship of the future, with large radar and modifications it would make to it, that would be the ship that would bestenefes dd defd itselff a vesseltt ak. we'll -- not att bad ship. a great ship. just an unaffordable ship, 6 to

$7 billion. we'll go back to building two subs and then make sure the next generation of carriers, with the electro magnetic launch is delivered on budget and on time starting 2015. i think we're on track to do it. we have all of the right people in the right places. we got the right programs in place and we have to monitor them. >> there are those on the hill who say that the navy in part because of the way that it's submitted sort of conflicting ship building plans over the years and drifting answers lacks credibility up here. what is your view about the credibility and the navy leadership? >> there was some screw-ups. we were toll lcs will cost 122 million. it is closer to 6. they have to be more realistic. that is probably the poster child for the one going wrong. they have to be honest with us because we have to turn around and ask the american people for those dollars and if we tell them we're going to pay 220 for

something, we better be paying 220 for something and not 700 for it. so they have to do a better job of being honest with that. part of the problem is also acquisition work. i'm convinced for a long time they didn't know what anything was worth. and i think it's also fair to say that the bush administration was a little too quick when somebody came to him with an additional bill, to just pay it. we're trying to rein that in with firm fixed contracts. having a set of plans to everything that we buy, and if we feel like the vendor is not being fair with us, put it out for bid and see who will be fair for it. we're taking a multiple approach and good business. it is what you would do with your dollars, it is what you would do if you were running this television studio and we should be purchasing things for the united states navy. >> you sponsored legislation to review the kind of ships it needs for the future. what kind of ships does the navy need. >> number one is fewer hull styles that do a larger variety

of things. so you get economies of scales when you buy the power plant, the hull, shipyards can produce them in series and price down. so which is the idea we'll build a lot. quite possibly we could have 100. we'll build a lot of lcss. we'll stick with the virginia class for a while. it is a good affordable submarine and will probably take something like that lpd hull and use it for the next jen rashgs again getting economies of scale on buying power plants, similar hulls in greater numbers. >> how do you control the ship costs, new ship construction costs? >> wonderful question that is what i was working witness undersecretary on. we have to reconstitute the navy's force. it was decimated into the rumsfeld years. he totally ignored the private sector is there to make money. we want the most ship for the

money. >> it started in the clinton administration. >> but it really got spun out of control during the rumsfeld years many one of the things we have to do is reconstitute the navy acquisition force, get economies everywhere we can, train them up on what a lineal foot of weld ought to cost, what a pound of steele ought to cost. what is that weapons program really worth? i'll spend time with senior navy brass looking at korean shipyards, some of the best in the world. we build some of the world's best ships but we can do it better. we have the world's greatest ship builders but need better tools in their hands. we need to work hard within the industry to help them control their costs. if it means government furnished equipment, if i can show the taxpayers we're getting a better ship with less money by furnishing equipment to that shipyard then i'm more than willing to do that, too. >> the navy used to specify specifically what should go into each ship so there was a certain degree of commonality, so

virtually the pumps, fans and motors were -- >> we're getting back to that. >> is that the key? >> it was the key. it was the experiment worth going to the system integrator. it didn't work out. we'll go back to the navy getting the experts from the native veen the coast guard, drawing up the specs, put it out to bid and get the best price for the ny oaand c st guard. >> letd me take the question to ddg1,000. enormous amount of investment in this ship. what will the taxpayer get out of this ship? >> we're going to get three platforms. it has a phenomenal gun on it that can probably hit this room from 70 miles away. so from the surface to port for the marines. unfortunately because it is a stealthy ship you build in limitations as far as radars, we need bigger radars to respond to threats from different parts of

the world. it is one of the things where the ship became obsolete before it was ever built. >> quick question. there are folks who say you're the member from ing gels because of your dogged support -- >> i'm a member from ship building. >> and ingles is one of the largest employers in your district and yet it is still suffering the aftereffects from katrina. quality problems that led to contentious relationship with the navy. how do you balance your role for ship building but advocate for your district, your oversight role? >> that is a very fair question. i have to do both. i think i am doing both. when you go back to the nuclear cruiser i'm the one saying you have to get nuclear certified again. >> even though they're not particularly excite to do do that. >> you go from wood to iron and transition from rivets to welds, this is another transition they have to make if they want to be

a viable shipyard in the future. i'm telling the workers and the workers are telling the management. navy is willing to work with us. you have to do both and i'm doing the same thing. it is tough love with all of the yards. that is one of the reasons we're looking at the korean yards in august. go see these korean yards and show them we got to get better. these are the tools these guys are using. we have the best ship builders, we have to put the best tools in their hands. >> thanks very, very much. >> thank you very much. (mom) he needed everything for college:

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walmart. all the way to the home, you meant... we bring fiber optic all the way to the home. um... which gives you more bandwidth than cable. so you can upload faster. so it's like comparing a horse and buggy to a sports car. am i the, uh, horse? (announcer) it's a whole new internet. only verizon's 100% fiber optic network makes uploading as easy as downloading. because your internet's not fast unless it's two-way fast. is is is the salary gap between civil servants and government employees is greg. if you're in private industry you can get $20,000 more a year than your government employee. less clear is why. here to answer that is evan lesser, an employment site for

clearances. why is there such a salary difference between two folks that are doing the same job with the same clearance? >> you have to look at the nature between a contractor and a civil servant. few things come into play. i think number one is the fact that you've got pay grades for civil servants. these are very structured methods of payment. people know exactly when they get a promotion what the next salary is going to be. whereas contractors have the ability to negotiate and renegotiate, definitely free market type of thing as they move not only between companies but as they move up within a company. second, signing bonuses, government traditionally doesn't offer signing bonuses, typical in the contracting world. look at benefits. federal employee benefits are known to be excellent. when you get into the contracting world they're usually sufficient but not like a federal employee. lot of employers attempt to make up the difference. >> health care is not as good so we'll give you more salary or

job security standpoint as well. >> yeah, job security is almost the number one issue. federal employees very secure type of position, compared to a contractor, who can lose funding. you know, the key thing to keep in mind is that when a contractor has a contract, the number one goal is to keep it. if they need top talent to -- to help ensure they will keep that contract, that means higher salaries. >> what does that do for the government's ability to not only attract but retain top talent who have security clearances? >> few issues there as well. i think when you look at the hiring cycle, you know, to hire a new federal employee is a much longer cycle than hiring a government contractor on that side. so when you look at maybe a 6-month time frame versus a two-week time frame, a lot of people, that is something that will turn them off right off the bat. in terms of retaining that type of talent it has to do more with someone's preference. salaries are important but when you look at the differences between federal workers and

contractors it boils down to things like the type of employer they want, the job security is very important. sal lowers aren't everything. benefits are important. job security and having a feeling of responsible is what people that work for government like. they like that type of thing. they're not necessarily looking for a lot of change. >> let us go to the question of outsourcing, for more than a decade the government has been aggressively outsourcing a lot of intelligence jobs. these are jobs that the government wants to pull back into government service. how are -- how is this going to work out? are the folks going to take that $20,000 salary increase and bring it back with them into the government, for example? >> i think it is going to be difficult. the reason the government outsourced in the past, one of the primary reasons has been technology and the government has always been a step or two behind the contractors in terms of high technology. so when you look for people who want to work with the most up to

date technology or have the experience with it, that they've always been on the contracting side. so trying to lure those people over to be federal employees, someone who is used to working a job where they can move very quickly, they have high technology, there is not a lot of red tape involved is going to be kind of a transition for people going from contracting to federal service, and how is the government going to keep these people? i don't know i don't think the salaries are necessarily going to change but some of the processes in terms of hiring to make sure it is much more quick and efficient process and again moving some of the high technology to the government side and having the government sort of catch up with where the contractors that will be pretty important to get people retained in federal service and stay tlg. >> of course, restructuring some of its grades would help as well. >> exactly. >> let me ask you in the limited amount of time left. what are some of the hottest jobs and highest paying jobs in the field that folks want to target. >> it is always it and

engineering. >> good allings fashioned systems engineering. >> contractors do have this larger salary because when you look at a lot of federal service positions you look at a lot of people who have a good fit there will do administrative roles, policy roles, institutional rides. contracting side has always been high technology, engineering, i.t. type of jobs and those traditionally pay more. so it does create an imbalance but it is more than just someone getting paid more. it is about who's fitting into the role and doing so most efficiently. >> evan, thank you very much. >> what the lessons from president battle. stay tuned. you're watching this we i n ws.ee

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the fight to save the f-22 fighter is over. the house this week followed the senate's lead in cutting funding to buy more than 187 jets that the pentagon wants. the administration appears to be prevailing and getting its way on other programs like a second engine for the joint strike fighter and ending the presidential helicopter contract. here is what it all means. we have lauren thompson. lauren, welcome back. >> in spirit of full disclosure, you advised lockheed martin among them, but what does this last week mean and what do these decisions mean? >> what we're seeing here is the obama defense priorities are

prevailing. lot of people weren't certain that would happen. but they managed to pull it together and to prevail both in the upper and lower chambers that means secretary gates will have more latitude for reorienting the nation's defenses weren't to basically cut more programs as we go forward. >> we were told that there will be more cuts coming after the quadrennial defense is complete. >> it gets repeated oftentimes if you spread enough defense contracting work around your program is immune from cuts and that was certainly virtually every story on the f-22 had that in there. doesn't this decision basically dispute that? >> not entirely. if you look at the vote in california and in connecticut and georgia where there were a lot of jobs on the line, those senators and those representatives lined up behind the program. you had two things that were different this year. first of all the air force and the contractor were not lobbying for the f-22. that is true to some degree on the presidential helicopter also.

in addition to that, a new administration whose majority in the congress did not want to embarrass the sitting president. >> does -- as we look forward, the deputy assistant secretary of defense, said there will be 50 to $60 billion shortfall between what the administration will spend and what is already in the plan. what impact will that have on defense programs. >> the shortfall is likely to be bigger. the u.s. government is spending $5 billion to date above and beyond what it is actually taking in, it will have to be further cuts down the road. if you're given that level of shortfall, given the fact you can't cut personnel you will probably cut investing spending, meaning research and weapons procurement. >> what are the most vulnerable programs. >> am fib abouts warfare and -- am fib be use, heavy brigade, air defense and close air support. that is where they see the cuts

coming. >> when you look at the calculus and budget picture going forward, how big a impact is the iraq withdrawal. some estimates say it will cost tens of billions. some say it will cost $75 billion to withdraw u.s. forces from iraq. >> depends on what we bring home. all the people will eventually have to leave. about the equipment, we don't know. some will be junked, some will be turned over to the iraqis. what is the pace of withdrawal and what are we trying to do for the iraqi security forces as we pull out? >> how much, if you will, political does both the president now having threatened a veto and succeeded and gates having bb the architect of this, get in the next planning rounds forward on defense? >> that is a very interesting question because we have reason to believe that secretary gates will only be there for one more budget round. that is what he seems to be signaling to the reporters he's with. he has to get something done

with the dwchlt r and the next budget to reorient things. he doesn't know who will follow him. >> some folks were looking at the qdr and saying this is a more closed review than we have. normally you have leaks. there are absolutely no leaks coming out or very few leaks coming out of it. second is that qdr is done without a strategy. are those fair criticisms? >> because we have a defense secretary held over from the last time around he has a much clearer idea of what he wants to get done. we're not starting from scratch here. you can skip some of those steps. the real thing they don't have is visibility into the availability of funding two or three years from that. without some control over rising personnel costs all their plans can be for naught. >> health care on top of that which will be consuming funding. >> 150% in this decade alone. >> it is always a treat having you. >> why the outlook for defense

programs might be more ominous than it seems. fab@ during times like these

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this week the obama admitted its expense exceeded. with military levels on the rise on a flat budget and supplemental budgeting on the decline, services have to be cut. it gets worse, the cost of pulling out of iraq let alone sustaining forces in afghanistan could cost tens of billions of dollars over the next three years and at a financial conference last week the administration assured china washington will be fiscally responsible. relying on beijing to finance more american debt. what does it mean? cuts to f-22, and presidential hell koltd and ddg destroys can seem minor in comparison to what

is to come. you can e-mail me. we're send ago very happy 219th birthday to the united states coast guard. we'll be back next sunday morning at 11:00. have a great week.