Navy DDG-51 Destroyer Procurement Rate: Issues and Options for Congress

94-343 F

CRS Report for Congress

Navy DDG-51 Destroyer Procurement Rate:

Issues and Options for Congress

Ronald O’Rourke

Specialist in National Defense

Foreign Affairs and National Defense Division

April 25, 1994

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Congressional Research Service - The Library of Congress

UCIT AY

NAVY DDG-51 DESTROYER PROCUREMENT RATE:

ISSUES AND OPTIONS FOR CONGRESS

SUMMARY

Congress has procured 29 Arleigh Burke (DDG-51) class destroyers since

FY1985; the first 83 had entered service by the end of 1993. The DDG-51

program is one of the Department of the Navy’s highest-priority procurement

programs. The Administration wants to continue procuring 3 DDG-51s per year

(28 total through FY2004), at a current cost of about $900 million per ship.

The issue for Congress is whether to modernize the Navy’s surface

combatant force by maintaining the DDG-51 procurement rate at 3 ships per

year or by adopting a different modernization strategy. Congress’ decision on

this issue could have important implications for DoD funding requirements, U.S.

military capabilities, and the U.S. defense industrial base.

New technologies first fielded in the 1980s have substantially increased the

capabilities of surface combatants. They are not only escorts, but important

combatants in their own right. In future years, the Navy will focus on

operations in littoral (near-shore) areas. The littoral is a complex, compressed

battle space that can be very demanding on naval forces.

At the end of 1993, the Navy operated a total of 135 surface combatants

(119 active and 16 reserve). The Navy’s goal is to achieve and maintain a force

of 124 surface combatants (114 active and 10 reserve). If this goal is accepted,

then a long-term average building rate of more than 3 ships per year is needed.

If the rate is reduced to less than 3 ships per year for a time, it must then be

higher than 3 ships per year at some other time. The Navy’s goal also calls for

80 of the 114 active surface combatants to be higher-capability ships like the

DDG-51s by about 2005. If this goal is accepted, another 25 to 30 highercapability ships would be needed by about 2005. The Administration’s plan

would provide 28 such higher-capability ships by about 2009.

The Navy’s surface combatant force-level goal has an analytical basis and

is not a priori unreasonable; it also cannot be conclusively demonstrated or

refuted on military grounds. The force-level goal can vary with policy objectives,

subjective judgments, and analytical assumptions. Changes in these factors can

produce force-level goals either higher or lower than the Navy’s.

Congress and the Executive Branch face the issue of whether to maintain

DDG-51 production at two shipyards or consolidate production at a single yard.

A procurement rate of 3 ships per year is a low rate with minimum flexibility

for sustaining DDG-51 production at two yards, but it is not necessarily a rockbottom rate. With a substantial amount of additional, non-DDG 51 work, a

procurement rate of 2.5 ships per year would be sufficient to sustain two yards,

with some risk. With a very substantial amount of additional, non-DDG-51

work, a procurement rate of 2 ships per year might sustain two yards, but at a

higher level of risk to the survival of the yards. Giving additional, non-DDG 51

work to one or both of the DDG-51 yards may require an explicit policy decision

to not give this work to other private or public shipyards.

TABLE OF CONTENTS

CONTEXT AND KEY FACTORS ..... 0.0... ccc ccc eee eee ee eee eee 1

INTRODUCTION oo. ccc ccc ccc cee eee eee eee e eens 1

KEY POINTS 2... ccc ccc cee ec ete eee eee ence eee eee e eens 3

BACKGROUND ... ec cceccceeeeee eee eee eee eees 9

DDG-51 PROGRAM on. cece ee ee eee eee e eens 9

MAJOR SURFACE COMBATANTS IN THE U.S. NAVY ......... 12

OPTIONS FOR CONGRESS 2... ccc cee eee eee eens 27

OPTIONS FOR PROCURING DDG-51s 2.1... . ccc cee cee eee 27

OPTIONS FOR UPGRADING/EXTENDING EXISTING SHIPS ... 29

COMBINING OPTIONS INTO INVESTMENT STRATEGIES ..... 31

ASSESSING THE OPTIONS ....... 0... eee eee eee eee eee 33

MILITARY FACTORS 2... cee ec cee cee eee eee eee eee 33

Procurement Rate for 124 Total Ships .............000e eee 33

Procurement for About 80 Higher-Capability Ships .......... 35

Appropriateness of 124/80 Goal .. i... ccc eee eee eee 35

For presence/deterrence ......... 0c cece eee eee eens 39

For major regional contingencies ...............0000- 46

INDUSTRIAL-BASE FACTORS .......... eee eee nen e eas 57

BUDGETARY FACTORS .... cc ccc cece ee eee ees 63

NAVY DDG-51 DESTROYER PROCUREMENT RATE:

ISSUES AND OPTIONS FOR CONGRESS

CONTEXT AND KEY FACTORS

INTRODUCTION

The DDG-51 Program

Congress began procuring Arleigh Burke (DDG-51) class destroyers in

FY1985. DDG-51s are multimission surface combatants capable of operating

either independently or in conjunction with other naval or military forces. They

are equipped with the Aegis system -- the Navy’s most capable ship combat

system -- and can attack targets that are in the air, on land, on the surface of

the sea, or underwater.

The DDG-51 program has been one of the Defense Department’s most

expensive weapon acquisition programs since FY1989. It is the only large, yearto-year program in the Navy’s FY1995-FY1999 shipbuilding plan, and it is one

of six major procurement programs that the Department of the Navy has

identified as being central to its long-term "recapitalization" (i.e., modernization)

plan.'! The Administration wants to procure 3 DDG-51s per year for the next

several years, at a current cost of about $900 million per ship.

In 1998, interest began to develop in Congress and the Defense Department

in the idea of reducing the DDG-51 procurement rate to something less than the

Administration’s planned rate of 3 ships per year. In February 1993, the

Congressional Budget Office, in the 1998 edition of its annual report on options

for reducing the federal budget deficit, included an option to reduce the DDG-51

procurement rate to 2 ships per year for the period FY1994-FY1998.? In May

! The other five programs are the FY1995 aircraft carrier (CVN-76), the

LPD-17 (formerly LX) amphibious shipbuilding program, the New Attack

' Submarine (and SSN-23), the F/A-18E/F Hornet aircraft program, and the

Medium Lift Alternative, or MLA (which the Navy intends to be the V-22 tilt-

* rotor aircraft). The Department of the Navy states that "These programs were

all maintained at the expense of other programs" in the Department’s FY1995-

_ FY1999 Program Review (PR-95). Statement of Vice Admiral T. Joseph Lopez,

Deputy Chief of Naval Operations (Resources, Warfare Requirements &

Assessments), [before the] Acquisition Subcommittee of the House Armed

Services Committee, 13 April 1994. p. 3.

2 U.S. Congress. Congressional Budget Office. Reducing the Deficit:

Spending and Revenue Options. Washington, 1993. p. 45.

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1993, Representative Santorum introduced H.R. 2037, the DDG-51 Destroyers

Act, which would reduce the DDG-51 procurement rate to two ships per year for

the period FY1994-FY1997.3

In October and November 1993, it was reported that the Office of the

Secretary of Defense had considered reducing the DDG-51 procurement rate to

2 ships per year before approving the 3-per-year rate at a meeting of the

Defense Acquisition Board on Oct. 19, 1993.4. In December 1993, the DoD

Inspector General issued an audit report on the DDG-51 program recommending

that it be reduced to 2 ships per year through FY1999.°

Interest in reducing the DDG-51 procurement rate to something less than

3 ships per year is likely to continue in 1994, because of concerns that other

defense programs are insufficiently funded. In March 1994, the Congressional

Budget Office, in the 1994 edition of its annual report on options for reducing

the federal budget deficit, included the option of reducing the DDG-51

procurement rate to 2 ships per year for the period FY1995-FY1999.°

Issue for Congress

The issue for Congress is whether to modernize the Navy’s surface

combatant force by maintaining the DDG-51 procurement rate at 3 ships per

year or by adopting a different modernization strategy. Congress’ decision on

8 No action has been taken on the bill other than referral to the House

Armed Services Committee, but the bill gained four cosponsors in November

1998 and a fifth in February 1994.

4 OSD, Navy Hash Out DDG-51 Plan; OSD Pushes 2/yr Instead of 3/yr Buy.

Inside the Pentagon, Oct. 23, 1993: 1, 18; OSD Likely to Approve Navy Plan for

Three DDG-51 Destroyers Per Year. Inside the Navy, Oct. 25, 1993: 1-2; Holzer,

Robert. U.S. Navy Wins Nod to Build 15 Destroyers. Defense News, Nov. 1-7,

1993: 1, 36.

5 U.S. Department of Defense. Office of the Inspector General. The

DDG-51 Destroyer Program as Part of the Audit of the Defense Acquisition

Board Review Process -- FY 1993 (U). Washington, 1993. (Audit Report No.

94-019 [Project No. 2AE-0033.04], December 10, 1993) p. i-ii. (Unclassified

executive summary provided to author by Navy Office of Legislative Affairs, Jan.

5,7 1994.) See also Rosenberg, Eric. Slash the Navy’s DDG-51 Destroyer

Program: IG. Defense Week, Jan. 3, 1994: 1, 11; Ward, Don. How Many Burkes

Should a Navy Build? Navy Times, Jan. 24, 1994: 8. For a press account on the

internal Pentagon rebuttal to the Inspector General’s Audit, see Rosenberg,

Eric. Pentagon Slams IG Over DDG-51 Destroyer Findings. Defense Week, Apr.

4, 1994: 5.

§ U.S. Congress. Congressional Budget Office. Reducing the Deficit:

Spending and Revenue Options. Washington, 1994. p. 39-40.

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this issue could have important implications for DoD funding requirements, U.S.

military capabilities, and the U.S. defense industrial base.

The purpose of this report is to support Congress in considering this issue.

The report provides background information on the DDG-51 program and the

roles and missions of U.S. Navy major surface combatants, outlines notional

options for Congress, and discusses military, industrial-base, and budgetary

factors that Congress may consider in assessing these options.

Sources of Information

Unless otherwise indicated, information in this report relating to the

DDG-51 program was supplied by the Navy in the course of several Navy

briefings for the author and consultations between the author and the Navy

during the second half of 1993 and early 1994. The author collected additional

information relating to the industrial-base aspects of the report during this

period through visits to Bath Iron Works and Ingalls Shipbuilding, the two

DDG-51 shipyards, discussions with officials from those shipyards, and

discussions with officials from Martin Marietta, the primary DDG-51 combat

system contractor.

KEY POINTS

The following are some of the key points made in the report.

On the Capabilities of Surface Combatants

Three technological developments fielded during the 1980s -- the Tomahawk

cruise missile, the Aegis combat system, and the Vertical Launch System

(VLS) -- have given U.S. Navy surface combatants substantially more potential

to operate independent of aircraft carriers or selectively substitute for them, and.

to influence events ashore and support military operations on land. Since World

War Il, surface combatants have been thought of as escorts; indeed, the term

"escort" has often been used as a synonym for surface combatants. In the wake

of these technological developments, however, surface combatants are no longer

just escorts of other ships; they have become combatants in their own right.

On the Post-Cold War Operating Environment

With the end of the Cold War, the focus of U.S. military strategy has

shifted away from the scenario of a major East-West conflict, and toward the

goals of maintaining regional stability, responding to and containing regional

crises, and fighting major regional conflicts (MRCs). For naval forces, including

surface combatants, this shift in strategic focus toward regional concerns means

a decreased emphasis on mid-ocean operations, war at sea, and stand-alone

operations (i.e, operations in which the Navy is largely separate from the other

services), and an increased emphasis on operations in littoral (i.e., near-shore)

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waters, operations intended to influence events ashore, and joint and combined

operations.

The littoral is a complex, compressed battle space, and operating in it is not

necessarily easier than operating in mid-ocean waters. Indeed, in certain

respects -- such as the variety of potential threats and reaction time -- littoral

operations can be more demanding on naval forces than the Cold War scenario

of mid-ocean operations against Soviet maritime forces. For surface combatants,

the shift in focus to littoral operations that are intended to influence events

ashore will, among other things, increase the importance of theater missile

defense operations, strike operations with the Tomahawk land-attack cruise

missile, and naval surface fire support operations.

On the Fit Between Procurement Rate and the Force-Level Goal

The Navy’s force-level goal for surface combatants is to achieve and

maintain a force of 124 ships (114 active and 10 reserve). If this goal is

accepted, and if surface combatants are to remain in service for 30 or 40 years,

then a long-term average procurement rate of more than 8 ships per year is

needed. If the rate is reduced to less than 3 ships per year for a time, it must

then be higher than 3 ships per year at some other time, so that the required

long-term average procurement rate of more than 3 ships per year is achieved.

The Navy’s force-level goal also calls for about 80 of the 114 active surface

combatants to be higher-capability ships by about 2005. Higher-capability ships

are currently characterized by having both the Aegis combat system and VLS.

DDG-51s and the final 22 ships in the 27-ship Ticonderoga (CG-47) class are

higher-capability ships. If this element of the Navy’s surface combatant forcelevel goal is accepted, then the Navy would need to acquire another 25 to 80

higher-capability surface combatants by about 2005. The Administration’s

planned DDG-51 procurement rate would provide 28 additional higher-capability

ships by the year 2009. :

On the Appropriateness of the Force-Level Goal

The Navy’s requirement for a force of 124 surface combatants, including

about 80 higher-capability ships by about 2005, has an analytical basis and is

not a priori unreasonable; it also cannot be conclusively demonstrated or refuted

on military grounds. The force-level goal can vary with policy objectives,

subjective judgments, and analytical assumptions. Changes in these factors can

produce force-level goals either higher or lower than the Navy’s force-level goal.

At a level of 124 ships, the percentage of the Clinton Administration’s

planned 330-ship Navy accounted for by surface combatants would be roughly

consistent with the percentages under the Reagan Administration’s planned 600-

ship Cold War fleet and the Bush Administration’s planned 415-ship Base Force

fleet. A force of 114 active surface combatants will sustain a level of overseas

deployments of surface combatants consistent with the Navy’s new policy of

maintaining "tethered" forward deployments of Navy ships. Depending on

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assumptions about warfighting scenarios, fighting two nearly simultaneous,

medium-sized major regional contingencies might require about 124 surface

combatants or some higher or lower number.

At a level of about 80 ships, the percentage of the surface combatant force

accounted for by higher-capability ships would be somewhat higher than the

percentage under the Reagan Administration’s planned Cold War fleet, but

roughly in scale with the Bush Administration’s planned Base Force fleet.

Operating successfully in the littoral region can require ships with a highcapability anti-air warfare system such as the Aegis weapon system. Aegis and

VLS also enable surface combatants to expand their contribution to littoral

combat operations by giving them the ability to fire large numbers of Tomahawk

missiles and (in the future) provide theater missile defense.

On Procuring a Modified (128-Cell) DDG-51 Design

The current (Flight ITA) version of the DDG-51 design has a total of 96

VLS cells for storing and firing missiles (32 cells in the front end of the ship, 64

cells in back end). This compares with a total of 122 cells on VLS-equipped

CG-47s. One option for DDG-51 procurement would be to procure a modified

version of the DDG-51 design with a 64-cell (rather than 32-cell) VLS magazine

in the front end. This would give the DDG-51 design a total of 128 VLS cells.

This modification, which would lengthen the ship by about 12 feet, would

increase the procurement cost of the ship by about $19 million, or a bit more

than 2 percent, while increasing its weapon capacity by 33 percent. The newly

emergent mission of theater missile defense, as well as the potential for using

VLS-launched weapons for naval surface fire support, might increase

requirements for VLS cells. In light of these considerations, this option may

merit further examination by the Navy and Congress.

On Rebuilding Older Ships as Higher-Capability Ships

As an alternative to procuring new DDG-5is, higher-capability ships can

also be obtained by rebuilding older cruisers and destroyers (i.e. CGN-36,

CGN-38, DDG-993, and DD-963 class ships) as Aegis/VLS ships. The cost

effectiveness of this option, however, is very questionable due to the high cost

to rebuild them (possibly almost as much as procuring new DDG-51s), their

advanced age and higher annual operating and support costs (particularly the

CGN-36s and CGN-38s) compared to DDG-51s, and the reduced survivability

features they would have in their rebuilt condition compared to DDG-51s.

Another alternative for obtaining higher-capability ships would be to

upgrade the first five CG-47 class Aegis cruisers (CG 47-51) to the highercapability CG-52 standard. This upgrade would involve, among other things,

adding VLS and the Tomahawk weapon control system to these five ships. This

alternative, which would cost a minimum of $100 million per ship, would

significantly expand the capabilities and potential usefulness of these ships by

giving them an ability to fire Tomahawks and a potential future capability (with

additional radar and computer modifications) to conduct theater missile defense.

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Given the significant original investment to build these ships, their relatively

constrained current capabilities, and their relatively young ages, this alternative

appears more cost effective than the option of rebuilding older cruisers and may

merit further examination by the Navy and Congress. This option can be

pursued either in lieu of DDG-51 procurement, or in addition to the

Administration’s planned DDG-51 procurement.

On Options for Upgrading Other Ships

There are two principal options for upgrading older ships to something less

than the higher-capability (i.e., Aegis/VLS) standard. One would be to backfit

VLS to the 7 ships in the 31-ship Spruance (DD-963) class that are not now

scheduled for backfitting. This would cost about $25 million per ship, and

would significantly expand their ability to contribute to littoral combat

operations by enabling them to fire large numbers of Tomahawks. This option

can be pursued either in lieu of DDG-51 procurement, or in addition to the

Administration’s planned DDG-51 procurement. The additional VLS capacity

on these seven ships would be equivalent to the VLS capacity on about 4.4 new

DDG-51s.

Of the 24 DD-963s currently scheduled to receive VLS, 18 have been

backfitted to date. Of the 6 remaining scheduled backfits, 4 are scheduled to

begin in FY1994, and 2 in FY1995. If it is determined that extending the VLS

backfit program to the other 7 ships in the class is not cost-effective, then the

obverse option of reducing the backfit program to something less than 24 ships

might also merit consideration. The goal of backfitting 24 of the 31 DD-963s

was established in the mid-1980s, when the Navy was planning to achieve and

maintain a 600-ship fleet including 242 surface combatants. With the Navy now

moving toward a 330-ship fleet with 124 surface combatants, Congress may wish

to consider whether 24 VLS-equipped DD-963s are still necessary.

The second principal option for upgrading older ships to something less

than the Aegis/VLS standard would be to upgrade some or all of the 51 Oliver

Hazard Perry (FFG-7) class ships with an anti-air warfare system based on a

frigate-sized phased-array radar (i.e., a phased-array radar smaller and less

powerful than the Aegis system’s SPY-1 radar). Given the cost involved -- up

to $200 million per ship -- this option would most likely be pursued to

compensate for a decision to procure fewer than 28 additional DDG-51s. The

AAW system on the upgraded ships would not be as capable as the Aegis system

and would lack the Aegis system’s potential for theater missile defense

operations, but it would be more capable than the AAW systems currently on

these ships, and would offer a level of capability similar to that now envisioned

by some NATO allies in Europe for their future surface combatants. The cost

effectiveness of this option would depend on the amount of gain in AAW

capability realized by the upgrade, and the feasibility and costs of extending the

service lives of these ships.

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On the Industrial Base and the Procurement Rate

Congress and the Executive Branch face the issue of whether to maintain

DDG-51 production at two shipyards or consolidate production at a single yard.

In assessing this issue, Congress may consider factors such as the benefits of

competition, the ability to return to higher rates of production if necessary in

the future, overhead and efficiency, shutdown and termination costs, and local

and state economic impact.

A Navy study of the DDG-51 industrial base suggests that while a

procurement rate of 3 ships per year is a low rate with minimum flexibility for

sustaining DDG-51 production at two yards, it is not necessarily a rock-bottom

rate. With a substantial amount of additional, non-DDG 51 work, the Navy

study suggests that a procurement rate of 2.5 ships per year (i.e., 2 ships one

year, 3 the next, and so on) would be sufficient to sustain two yards, with some

risk, With a very substantial amount of additional, non-DDG-51 work, the Navy

study suggests that a procurement rate of 2 ships per year might sustain two

yards, but at a higher level of risk to the survival of the shipyards. It should

also be noted that giving additional non-DDG 51 work to one or both of the

DDG-51 yards may require an explicit policy decision to not give this work to

other private or public shipyards.

The Navy study suggests that with a substantial amount of additional, non-

DDG 51 work, a rate as low as 1.5 ships or 1 ship per year would be sufficient

to sustain a single DDG-51 production yard.

The study suggests that the DDG-51 supplier and engineering base can be

sustained with a procurement rate as low as 2 ships per year, though not

without loss of some suppliers, supplier disruption, and restructuring of supplier

operations. At a procurement rate of 1.5 ships or 1 ship per year, maintaining

the DDG-51 supplier and engineering base could become difficult or problematic

due to loss of key suppliers and engineers.

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BACKGROUND

This chapter provides background information on the DDG-51 program and

on major surface combatants in the U.S. Navy.

DDG-51 PROGRAM

The DDG-51 class destroyer was conceived in the late 1970s as a less

expensive, more numerous companion to the Aegis-equipped Ticonderoga

(CG-47) class cruiser.’ The DDG-51 design is smaller than the CG-47 design

and carries fewer weapons, but is equipped with a version of the Aegis Combat

System very similar to the version on the CG-47.2 The key features of the

Aegis Combat System are a highly capable phased-array radar called the SPY-1

and an associated bank of high-speed computers that run the Aegis system’s

extensive software. Compared to older U.S. surface combatants that lack the

Aegis combat system, the CG-47 and DDG-51 class ships can react to threats

more quickly, handle more targets simultaneously, use their various weapons in

a more integrated manner, and maintain better awareness of the tactical

situation around them.’ The DDG-51 and CG-47 designs both have gas turbine

propulsion plants, but the DDG-51 class uses a new hull design that has better .

survivability features than the CG-47 design.

Two shipyards build DDG-51 class ships: Bath Iron Works of Bath, ME, and

Ingalls Shipbuilding of Pascagoula, MS (a division of Litton Industries). The

program has more than 1,400 prime contractors in 44 states. By far the largest

of these is Martin Marietta, the primary contractor for the Aegis system; other

prime contractors include FMC Northern Ordnance Division, Hughes, Paramax,

Raytheon, and Rockwell.

7 A total of 27 CG-47 class ships were funded between FY1978 and FY1988.

The first entered service in 1983 and the 27th will enter service later this year.

8 For an early, more detailed comparison of the DDG-51 and CG-47 designs,

see U.S. Library of Congress. Congressional Research Service. The Navy’s

Proposed Arleigh Burke (DDG-51) Class Guided Missile Destroyer Program: A

Comparison With an Equal-Cost Force of Ticonderoga (CG-47) Class Guided

Missile Cruisers. Report No. 84-205 F, by Ronald O’Rourke. Washington, 1984.

61 p. (November 21, 1984) ,

9 The part of the Aegis Combat System that handles anti-air warfare is

‘called the Aegis Weapon System. For a more detailed description of the Aegis

Weapon System, see U.S. Library of Congress. Congressional Research Service.

The Aegis Anti-Air Warfare System: Its Principal Components, Its Installation

on the CG-47 and DDG-51 Class Ships, and Its Effectiveness. Report No.

84-180 F, by Ronald O’Rourke. Washington, 1984. 18 p. (October 24, 1984)

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As shown in the table below, a total of 29 DDG-51s have been funded

through FY1994 at a total procurement cost of about $23 billion.!°

TABLE 1. DDG-51 PROCUREMENT FY1983-FY1994

(billions of then-year dollars, rounded to nearest ten million)

| | 84 85 | 86 | 87 | 88 | 89 | 90 | 91 | 92 | 98 | 94 | Tot.

Quantity 4 3 29

Cost* 3.21 | 2.67 | 23.93

Funding* I 0.08 1.14 | 0.10 1.62 | 0.01 | 3.68 | 3.65 | 8.17 | 3.98 | 3.85 | 2.72 23.62

* Cost is the combined procurement cost of the ships funded in a given fiscal year. Funding is

the amount of procurement funding provided for that fiscal year; it is the sum of advanced

procurement funding for ships procured in future years, funds required to complete funding of

ships procured in that fiscal year, cost growth and escalation on ships funded in previous years,

and outfitting and post-delivery costs for ships entering service. In addition to procurement

funding, the DDG-51 program has also been provided funding over the years for research and

development and military construction.

At the current procurement rate of 3 ships per year, the ships have a unit

procurement cost of about $900 million.!!

Three DDG-51s were in service as of Dec. 31, 1993; the 29th is scheduled

to enter service in 1999. The last of the 3 ships funded in FY1994 and

subsequent DDG-51s will be built to a somewhat altered design known as the

Flight ITA configuration. The Flight IIA configuration is intended to make the

DDG-51 design more appropriate for operations in littoral waters. Compared

* With regard to FY1986, the fact that no ships were funded in the year

following the year in which the lead ship was funded is a normal feature of

Navy shipbuilding programs that is intended to allow time for problems in the

ship’s design that are discovered in the construction process to be fixed before

construction begins on the follow-on ships in the class. With regard to FY1988,

the Reagan Administration originally requested funding for 2 CG-47s and 3

DDG-51s as part of a plan to gradually phase out CG-47 production while

phasing in DDG-51 production. But since the DDG-51 production effort had

fallen behind schedule and only 5 ships remained to be funded in the CG-47

program, Congress decided to fund the final 5 CG-47s in FY1988 and defer

procurement of additional DDG-51s to FY1989. (See the reports of the House

and Senate Armed Services Committees on the FY1988 defense authorization

bill [p. 58-59 of H.Rept. 100-58 and p. 46 of S.Rept. 100-57, respectively].

‘1 The combined cost of the 3 ships requested for FY1995 is $2,697.7

million, or $899.28 million each. (U.S. Department of Defense. Procurement

Programs [P-1], Department of Defense Budget For Fiscal Year 1995.

Washington, 1995. [February 1994] p. N-20.)

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to earlier DDG-51s, the Flight IIA design features, among other things, the

addition of a helicopter hangar, a mine-hunting capability for the bow sonar,

and (when it becomes available) a new close-in air-defense missile.

The originally planned procurement rate for the DDG-51 program was 5 or

6 ships per year. This was reduced to 4 ships per year by the Bush

Administration’s 1990 Major Warship Review, to 3.5 ships per year by the Bush

Administration’s outgoing FY1994-FY1999 defense budget outline, and to 3

ships per year by the Navy’s 1992/1993 Investment Balance Review (an internal

resource-allocation process). The 3-per-year rate was endorsed by the Office of

the Secretary of Defense in October 1993 and now appears in the Clinton

Administration’s FY1995-FY1999 Navy shipbuilding plan. The currently

planned DDG-51 procurement rate thus represents a reduction of 40 percent to

50 percent from the rate originally planned during the Cold War.

As shown in the table below, the Navy’s current plan is to continue

procuring 3 DDG-51s per year until FY2003, at which time the Navy wants to

shift to procurement of its planned next-generation destroyer, DD21, meaning

the “destroyer for the 21st Century." The Navy thus wants to procure a total

of 28 more DDG-51s. At a unit procurement cost of about $900 million, these

28 ships would cost about $25 billion in FY1995 dollars.

TABLE 2. DDG-51/DD21 PROCUREMENT, FY1995-FY2005

(number of ships procured per year)

95 | 96 | 97 | 98 | 99 | 00 | 01 | 02 | 08 | 04 | 05

DDG-51 |} 3 | 3 | 3/313 )]383 1/3 413 411138

DD21 1/0o01]83

While the DDG-51 program has received oversight attention from Congress

over the years on various issues, it has been relatively uncontroversial compared

to other major Navy or DoD acquisition programs. Although the DoD Inspector

General’s December 1993 audit report raised some issues regarding the

treatment of the DDG-51 program in DoD’s formal acquisition milestone

process,’? the program appears to be experiencing no major cost, schedule, or

technical problems. Consequently, interest in Congress and elsewhere in

reducing the DDG-51 procurement rate appears motivated primarily not by

specific concerns about the DDG-51 program, but rather by a general desire to

reduce large procurement programs, if possible, so as to reduce total DoD

funding requirements or release funding for other DoD programs.

2 The DDG-51 Destroyer Program as Part of the Audit of the Defense

Acquisition Board Review Process -- FY 1993 (U), op. cit., and Pentagon Slams

IG Over DDG-51 Destroyer Findings, op. cit.

CRS-12

MAJOR SURFACE COMBATANTS IN THE U.S. NAVY"

This section provides information on the types and classes, force levels,

service lives, and roles and missions of U.S. Navy surface combatants.

Types and Classes

Grouped in order of descending size and level of engineering, U.S. surface

combatants include battleships (now retired), cruisers and destroyers, and

frigates. U.S. cruisers used to be considerably larger than U.S. destroyers, Over

the last quarter century, however, U.S, cruisers have become smaller and U.S.

destroyers larger. Consequently, U.S. cruisers and destroyers now overlap in

size and capability. The CG-47 design, for example, is built on a modified

version of the basic Spruance (DD-963) class destroyer hull and was originally

classified as a destroyer (DDG-47). Compared to U.S. cruisers and destroyers,

US. frigates are considerably smaller and less complex in their engineering.

Frigates, for example, have one shaft and propeller, while cruisers and

destroyers have two shafts and propellers.

U.S. surface combatants can be grouped a second way -- into higher- and

lower-capability ships. The higher-capability ships would include the newer

cruisers and destroyers; the lower-capability ships would include the frigates and

the older cruisers and destroyers. In terms of key systems, higher-capability

ships are currently distinguished by having both the Aegis system and the

Vertical Launch System (VLS). The capabilities of the Aegis system were

described briefly in the previous section on the DDG-51 program. VLS permits

a surface combatant to carry large numbers of Tomahawk cruise missiles.

Lower-capability ships lack one or both of these systems.

The table below summarizes the U.S. Navy surface combatant classes

involved in this analysis (it excludes some older classes that are expected to be

completely retired by the end of the decade“). Aside from the CG-47s and

18 Some discussions of major surface combatants include aircraft carriers

among the surface combatants, since carriers are surface ships that engage in

combat operations. A carrier, however, differs significantly from other surface

combat-oriented ships in that its air wing constitutes its main armament and its

design is determined primarily by the requirement to embark, maintain, and

operate a collection of wheeled aircraft. For these reasons, this report, like

many treatments, places carriers into a separate category of their own. Since

this discussion is limited to major surface combatants, smaller surface

combatants, such as corvettes and patrol craft of various kinds, are not

considered.

4 Most of the six ships in the CGN-38 and CGN-36 classes are scheduled

for retirement by the end of the decade. One, the Texas (CGN-39), was taken

out of service in 1993, and another, the Virginia (CGN-38), is scheduled to be

decommissioned by the end of FY1994. The CGN-38 and CGN-36 classes,

however, are young enough that they could be kept in service until 2005-2010.

CRS-13

DDG-51s, these include ships built mostly in the 1970s: the Virginia (CGN-38)

and California (CGN-36) class nuclear-powered cruisers, which were originally

intended to accompany nuclear-powered aircraft carriers; the Kidd (DDG-993)

class destroyers, which were originally ordered by Iran but were purchased by

the U.S. Navy when the Iranian government canceled its order; the 31 Spruance

(DD-963) class destroyers, which as originally built were primarily antisubmarine warfare ships but with VLS are now strike and anti-surface warfare

ships as well; and the Oliver Hazard Perry (FFG-7) class frigates, which were

built primarily for the Cold War wartime mission of convoy escort and duties in

lower-threat environments.

As can be seen in the table, the higher-capability ships in the analysis

include the 29 DDG-51s funded to date and 22 of the 27 CG-47 class ships (i.e.,

CG-52 and up). The lower-capability ships include the first 5 CG-47s (CG-47

through CG-51), which lack VLS; the DD-963s, which lack Aegis; and the

remaining classes, which have neither Aegis nor VLS.

To be rated as a guided missile ship ("G" in the designation), a U.S. Navy

surface combatant must have an area-defense anti-air warfare (AAW) system.!®

The Virginia (CGN-38), California (CGN-386), and Kidd (DDG-993) class ships

carry an area-defense AAW system called the New Threat Upgrade (NTU). It

is the second most capable area-defense AAW system after Aegis, but the step

down from Aegis to NTU is a fairly large one, because NTU is built around an

old-style, mechanically rotating radar rather than a phased-array radar like the

SPY-1 radar in the Aegis system. The area-defense AAW system on the Oliver

Hazard Perry (FFG-7) class frigates is in turn less capable than NTU. The

DD-963s are equipped with only a point-defense AAW system.

Service Lives

There has been some variation in recent years in projected service lives for

service combatants. In most instances, service lives have been put at 30 to 35

years. The Navy’s 1988 Surface Combatant Force Requirements Study

(SCFRS), however, put the figure at 40 years.

A ship’s service life is usually determined by an analysis that takes three

factors into account. One factor is Expected Service Life (ESL), which focuses

on the condition of the ship’s basic hull and structure. ESL for a ship can

change if its hull and structure are found to be aging either faster or slower

than expected. ESL can often be extended through structural overhaul, repair,

and modification work, but the cost of this work can be substantial.

Consequently, this analysis includes the five CGN-36 and CGN 38 class ships

still in service as of Dec. 31, 1998.

15 An area-defense system is capable of defending not only the ship on which

it is installed, but other ships in the area as well. A point-defense system, in

contrast, can only defend a single point -- the ship on which it is installed.

CRS-14

TABLE 3. SURFACE COMBATANT CLASSES: SELECTED DATA

Number AAW system

built or

Class* funded | Entered Area defense 3

through | service defense ||

FY1994

Ticonderoga

(CG-47 to -51)

Ticonderoga

(CG-52 to -73)

Virginia

(CGN-38)

California

(CGN-36)

Arleigh Burke

(DDG-51)

Kidd 4 81-82 | x

(DDG-993)

Spruance 31 715-83 xX Xe

(DD-963)

O. H. Perry 51 77-89 Xx

(FFG-7)

Shaded columns -- Aegis and VLS -- denote systems that ships must currently have to qualify as

higher-capability ships.

s

* CG = guided missile cruiser; CGN = nuclear-powered guided missile cruiser; DDG = guided

missile destroyer; DD = destroyer; FFG = guided missile frigate.

** 24 of the 31 ships are to be backfitted with VLS; 18 of the 24 have now been backfitted.

A second factor is Mission Effectiveness Life (MEL), which focuses on the

ability of the ship’s combat system to defeat projected threats. As an

adversary’s weapons improve, the ability of a given ship combat system to defeat

an attack by that adversary declines. Eventually, a point is reached where the

combat system can no longer defend the ship adequately against an adversary

attack. The MEL for a ship can change if there are changes in a ship’s missions

or in the projected rate of improvement of adversary weapons. Ship combat

systems can be upgraded to keep pace with improving adversary weapons, but

there are usually limits to such upgrades because of inherent limits in the

combat system or because installing the upgrade would exceed the ship’s space,

CRS-15

weight, center-of-gravity, power-generation, or personnel limits. Upgrading the

combat system of an older ship can involve substantial cost, because it can

involve extensive rip-out and rebuilding of parts of the ship. This is particularly

true for upgrades that were not envisioned at the time the ship was originally

designed.

As shown in the table below, for the ship classes considered here, the Navy

currently judges MEL to be either equal to or somewhat less than ESL, and

currently judges the FFG-7s’ ESL and MEL to be about 10 years less than the

ESL and MEL of the cruisers and destroyers.

TABLE 4. SURFACE COMBATANT SERVICE LIVES

Class Expected Service Life Mission Effectiveness

| | (ESL) Life (MEL)

CG-47 35 35

CGN-38 35 30

CGN-36 35 30

DDG-51 35 35

DDG-993 35 30

DD-963 35 35

FFG-7 25 20

A third factor is the ship’s annual operating and support (O&S) cost, which

can rise as the ship ages and its basic mechanical and electrical systems

deteriorate and must be repaired more frequently or replaced. Finding repair

parts for older equipment can become increasingly difficult if the equipment goes

out of manufacture and parts suppliers become scarce. Equipment on older

ships might require more personnel to operate and maintain than analogous

equipment on newer ships, and might require unique or specialized training,

which can increase personnel costs. This can be particularly true with regard

to an older ship’s propulsion system.

Ships are thus retired under any of four scenarios: (1) ESL and MEL have

not expired but a shift or reduction in the Navy’s missions eliminates the need

for ships of that. kind; (2) ESL and MEL have not expired but the ship’s annual

O&S cost has increased to the point where it is no longer cost-effective to

operate the ship to perform its missions; (8) ESL or MEL has expired and

cannot be extended; (4) ESL and/or MEL have expired, but the cost of extending

ESL and/or MEL, perhaps combined with an increasing annual O&S cost, makes

it cost-ineffective to extend the ship’s life.

CRS-16

Force levels

Historie

Figure 1 shows the number of surface combatants in the U.S. Navy from

1948 through 1993; figure 2 shows surface combatants as a percentage of all

ships in the Navy. As can be seen in the figures, although the total number of

surface combatants dropped substantially around 1970, when large numbers of

World War II-era destroyers reached the end of their service lives and were

retired, the percentage of the Navy accounted for by surface combatants has

remained fairly steady over time, with the figure for most years falling between

30 percent and 40 percent.

Planned

The Navy’s current force-level goal for surface combatants is a force of 124

ships, including 114 active ships and 10 in the Naval Reserve Force (NRF). Of

the 114 active ships, about 80 are to be higher-capability ships by about 2005.

The 10 NRF ships are to be lower-capability ships (specifically, FFG-7s).

The table below shows how this force-level goal for surface combatants

compares with the goals in the Reagan administration’s 600-ship Navy plan and

the Bush Administration’s 415-ship Base Force Navy plan. As can be seen in

the table, the Navy’s current plan, although smaller than the Base Force plan,

would have surface combatants constitute about the same share of the Navy as

under the Reagan and Bush Administration plans. The Base Force and current

- Navy plans contain a somewhat higher percentage of higher-capability ships

than the Reagan administration plans.

At the end of 1993, the Navy had a total of 135 surface combatants in

service and another 27 (the final CG-47 and 26 DDG-51s) funded or under

construction. Thus, without additional retirements, the Navy by 1999 would

have a total of 162 surface combatants.

The Navy plans to reduce the surface combatant force over the next year

or so to a total of 124 ships, and then maintain the force at about this level

thereafter. This plan involves retiring a number of surface combatants,

particularly the CGN-38s and many of the FFG-7s, between now and 1999,

several years before they reach the end of their Mission Effectiveness Lives.'®

16 The CGN-36s probably would have been retired early as well, except that

they have recently completed expensive nuclear refueling overhauls that were

funded a few years ago, when the Navy was planning a larger surface combatant

force. The Navy apparently plans to keep the CGN-36s in service for at least

a few years so as to better amortize the cost of their refueling overhauls.

Although the CGN-38s are younger than the CGN-36s, the CGN-38s have not

yet had their nuclear refueling overhauls funded and would need them to remain

in service; retiring these ships thus avoids the cost of their overhauls.

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TABLE 5. SURFACE COMBATANT FORCE-LEVEL GOALS

As % of total Navy

Reagan plan Bush Base } Current

Ships — Force Navy

Original | 1988* plan

Battleships 4 4 0 0

Higher-capability 137 120 ~100 ~80

Lower-capability (active) 75° 78 ~ 35 ~30

Lower-capability (NRF) 26° 26 16° 10

TOTAL | 242 228 ~ 150° 124

% that are higher-capability

a In 1988 the original Reagan administration goals were revised by the Surface Combatant

Force Requirements Study (SCFRS).

b Some early presentations of the original Reagan plan show 127 frigates (101 active plus 26

NRF, rather than 101 active including 26 NRF).

c Plus 40 frigates -- 8 training frigates (FFTs) and 32 mobilization frigates -- in the Innovative

Naval Reserve Concept (INRC) separate from the NRF.

d Calculation excludes 40 INRC frigates.

Projected (no further procurement or early retirements)

Figures 3, 4, and 5 show the projected number of surface combatants in the

Navy, without further procurement or early retirements, using MEL, ESL, and

a 40-year life, respectively. As shown in the figures, the total number of surface

combatants exceeds the Navy’s force-level goal of 124 ships until 2003, 2008, and

2020, respectively, and then drops below the goal. The excess ship totals in the

early years of the figures provide an opportunity for retiring some ships before

the end of their MEL, ESL, or 40-year lives.

Roles and Missions

In General

U.S. Navy surface combatants perform a wide variety of roles and missions,

including the following:

presence and deterrence

protection of merchant ships

evacuation/humanitarian assistance/disaster relief

maritime surveillance and interception

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@ protection of Navy ships

@ influence situations ashore/support military operations on land”

Maritime surveillance and interception can include sanctions enforcement

operations such as those currently in effect against Iraq, Haiti, and in the

Adriatic Sea, and drug-interdiction operations in the Caribbean and the Eastern

Pacific. Protection of merchant ships includes operations such as the 1987-1988

tanker-escort operation in the Persian Gulf. Protection of Navy ships was a

responsibility during Operation Desert Shield/Desert Storm. Influencing

situations ashore and supporting military operations on land can include defense

of port areas against air and missile attack and attacking coastal and inland

targets.

Surface combatants perform these roles and missions in a variety of naval

formations, including carrier task forces, non-carrier task forces, and formations

consisting of a few or several surface combatants. About one-half of U.S. Navy

surface combatant operations are performed apart from carriers and amphibious

ships.

Performing these roles and missions can involve a variety of warfare areas

above, below, and on the surface, including the following:

® anti-air warfare (AAW) -- defense against aircraft and cruise missiles

e@ theater missile defense (TMD) -- defense against ballistic missiles

® anti-submarine warfare (ASW) -- defense against submarines and

torpedoes

@ mine warfare (MIW) -- for surface combatants, primarily avoidance of

mines

e anti-surface warfare (ASuW) -- defense against ships, boats, and patrol

craft

@ strike warfare (StkW) -- attacking targets on land away from friendly

forces

e@ naval surface fire support (NSFS) -- attacking targets on land in

support of nearby friendly ground forces

® command and control/battle management

Recent Changes

U.S. Navy surface combatant roles and missions have changed in recent

years due to technological developments, which have affected what surface

combatants can do, and to the post-Cold War shift in U.S. strategic focus, which

has affected what surface combatants might be called on to do.

Technological developments. Three key systems that entered service

in the 1980s substantially expanded U.S. Navy surface combatant capabilities:

This list of roles and missions was compiled from Navy briefings to the

author and Navy testimony to Congress.

CRS-24

@ The Tomahawk cruise missile, which entered service with surface

combatants in 1982, gave surface combatants an ability to attack

targets hundreds of miles away and thereby made surface combatants

comparable to aircraft carriers in terms of potential attack range.

e The Aegis combat system, which entered service in 1983, gave

surface combatants a much-improved AAW ability, better situational

awareness and battle management capability, and a potential

capability for conducting theater missile defense operations.

e The Vertical Launch System (VLS), which entered service with

surface combatants in 1986, enabled surface combatants to carry large

numbers of Tomahawk cruise missiles. '®

These three key technological developments have given U.S. Navy surface

combatants substantially more potential to operate independent of aircraft

carriers or selectively substitute for them, and to influence events ashore and

support military operations on land. Since World War II, surface combatants

have been thought of as escorts; indeed, the term "escort" has often been used

as a synonym for surface combatants. In the wake of these technological

developments, however, surface combatants are no longer just escorts of other

ships; they have become combatants in their own right.

Shift in strategic focus. With the end of the Cold War, the focus of US.

military strategy has shifted away from the scenario of a major East-West

conflict, and toward the goals of maintaining regional stability, responding to

and containing regional crises, and fighting major regional conflicts (MRCs).

For naval forces, including surface combatants, this shift in strategic focus

toward regional concerns means a decreased emphasis on mid-ocean operations,

war at sea, and stand-alone operations (i.e., operations in which the Navy is

largely separate from the other services), and an increased emphasis on

operations in littoral (i.e., near-shore) waters, operations intended to influence

events ashore, and joint and combined operations.

Operating in littoral areas is quite different from operating in mid-ocean

waters, and not necessarily easier. Indeed, in certain respects, littoral operations

can be more demanding on naval forces than the Cold War scenario of mid-ocean

operations against Soviet maritime forces.

18 The Vertical Launch System stores and launches missiles from simple,

vertical silos that are sunk into the main deck of the ship and covered with

individual hatches. Compared to the older, rail-style missile launchers on U.S.

surface combatants (which store missiles below deck and then employ

complicated machinery to move them to an above-deck missile-launching rail),

VLS has several advantages, including the following: increased magazine

capacity; a faster missile launch reaction time and firing rate; fewer moving

parts and hence greater reliability; and less above-deck equipment, which can

contribute to the ship’s radar cross section and is vulnerable to damage from

attack.

CRS-25

e

The land/sea junction of the littoral area is environmentally complex.

Diverse and shifting weather patterns, and the nearby presence of land, can

affect the performance of radar systems. The varying depth, temperature, and

salinity of the water, and the varying conditions on the bottom, similarly alter

sonar performance.

Littoral waters can feature a wide variety of potential threats, including

shore-based aircraft, missiles and artillery; ships; boats and patrol craft;

submarines; minisubs; swimmers; and mines. Many of these potential threats

would not be present in mid-ocean waters. Littoral operations also pose an

identification-friend-or-foe (IFF) challenge. The area can feature a mix of

friendly, hostile, and neutral actors, and a mix of military and civilian air and

sea traffic.

Littoral operations can feature a number of physical or political constraints

on tactics. Supporting military operations on land may require surface

combatants to remain relatively stationary for extended periods of time,

reducing the potential for evading detection and targeting by enemy forces. In

relatively closed bodies of water like the Persian Gulf, there may be limited

room to maneuver for purposes of self-defense. Operating close to shore, and

in close quarters with potentially hostile submarines and surface craft, means

that enemy missile flight distances, and thus defensive system reaction times,

can be quite short, putting a premium on being able to react rapidly.!® There

may be strict rules of engagement (ROE) that may prevent the ship from taking

certain kinds of defensive actions, particularly preemptive ones. And lastly,

elected officials and the public at large may have high expectations of U.S.

forces, including expectations of "clean" or "surgical" strikes with a minimum of

damage to civilians and untargeted property.

The littoral, in short, is a complex, compressed battle space that can place

particularly high demands on the capabilities of surface combatants. Compared

to mid-ocean operations, littoral operations are not a lesser included case, but

rather a different case that. might be easier in some respects, but is more

difficult in others.

'? A subsonic anti-ship cruise missile like the widely proliferated Exocet, for

example, may approach at a speed of about 600 miles per hour, or 1 mile every

6 seconds. A supersonic anti-ship missile might travel at twice that speed. Even

allowing time for the anti-ship missile to get up to cruising speed, if the enemy

launch platform is only a few miles away, the defending ship might have less

than a minute to detect the missile, properly identify it as a threat, compute a

fire control solution, fire a weapon, and destroy the missile at a safe distance

from the ship. Shooting down a missile aimed at another ship can add to the

challenge because the target ship might be even closer to the anti-ship missile’s

launch point, and because the defending missile might have to fly further to

intercept the anti-ship missile.

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