Order Code RL32665
CRS Report for Congress
Received through the CRS Web
Potential Navy Force Structure and Shipbuilding
Plans: Background and Issues for Congress
November 8, 2004
Ronald O’Rourke
Specialist in National Defense
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

Potential Navy Force Structure and Shipbuilding Plans:
Background and Issues for Congress
Summary
Navy and Department of Defense (DOD) officials reportedly are considering
reducing at least some parts of Navy force structure from current levels. In addition,
the Navy reportedly submitted to the Office of the Secretary of Defense a draft
FY2006-FY2011 budget plan that would delay or reduce a number of planned Navy
shipbuilding programs. These developments have caused concern among Members
of Congress and others about potential DOD plans for the Navy and the effect these
plans might have on the shipbuilding industrial base.
The current absence of an officially approved, consensus plan for the size and
structure of the Navy may make it difficult, if not impossible, for Congress to
conduct effective oversight by reconciling desired Navy capabilities with planned
Navy force structure, and planned Navy force structure with supporting Navy
programs and budgets. It may also cause business-planning uncertainty for industry.
Statements from Navy officials suggest that the next Navy force structure plan
may call for a fleet of roughly 250 to 330 ships. Historical figures for the total
number of ships in the Navy are not necessarily a reliable yardstick for assessing the
adequacy of today’s Navy or a future planned Navy that includes a certain number
of ships. Similarly, trends over time in the total number of ships in the Navy are not
necessarily a reliable indicator of the direction of change over time in the fleet’s
ability to perform its stated missions.
Current force-planning issues that Congress may consider in assessing how large
a Navy the United States needs include sea-based missile defense; the sea basing
concept for conducting expeditionary operations ashore; naval requirements for the
global war on terrorism and irregular conflicts; the possible emergence over the next
10 to 25 years of significantly more capable Chinese maritime military forces; new
technologies that may affect U.S. Navy ship capabilities; Navy ship homeporting
arrangements and deployment methods; DOD’s increased emphasis on achieving full
jointness in U.S. military operations; and potential tradeoffs between funding Navy
requirements and funding competing defense requirements.
Candidate shipyards for building Navy ships in coming years include the six
yards that have built the Navy’s major warships in recent years and three additional
yards that are competing to build Littoral Combat Ships (LCSs). In assessing how
many shipyards should be regularly involved in Navy shipbuilding in coming years,
Congress may consider a number of factors, including the production capacities of
these nine yards, the potential shipbuilding rate for a fleet of 250 to 330 ships, the
potential need to surge to a higher rate of production, the potential for creating new
shipyards or reopening closed ones, shipyard fixed overhead costs, costs associated
with split learning curves and government supervision of Navy shipbuilding work,
competition in design and construction of Navy ships, regional labor markets,
potential shipyard work other than Navy shipbuilding, the geographic base of support
for Navy shipbuilding, and the distribution of the economic benefits of shipbuilding
around the country. This report will be updated as events warrant.

Contents
Introduction and Issue for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
No Current, Officially Approved, Force Structure Plan . . . . . . . . . . . . . . . . 3
310-Ship Plan From 2001 QDR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Navy 375-Ship Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Reasons For Planning Uncertainty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Capabilities-Based Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Implications of Not Having A Current Plan . . . . . . . . . . . . . . . . . . . . . . . . . 6
For Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
For Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Potential Features of Next Navy Force Structure Plan . . . . . . . . . . . . . . . . . 8
Potential Navy Plans for Shipbuilding Programs . . . . . . . . . . . . . . . . . . . . 11
Overall Ship Procurement Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Individual Shipbuilding Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Issues for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Number of Ships in the Navy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Capabilities-Based Planning and Numbers of Ships . . . . . . . . . . . . . . 16
Historical Fleet Numbers As A Yardstick . . . . . . . . . . . . . . . . . . . . . . 16
Previous Force Structure Plans As A Yardstick . . . . . . . . . . . . . . . . . 17
Current Force-Planning Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Potential Oversight Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Number of Yards Involved in Navy Shipbuilding . . . . . . . . . . . . . . . . . . . . 23
Candidate Yards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Factors to Consider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Potential Oversight Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Legislative Activity in 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
FY2005 Defense Authorization Bill (H.R 4200/P.L. 108-375) . . . . . . . . . . 35
List of Tables
Table 1. Notional Possibilities for the Next Navy Force Structure Plan . . . . . . 10
Table 2. Draft Navy Shipbuilding Plan for FY2006-FY2011 . . . . . . . . . . . . . . . 11
Table 3. Annual Shipyard Production Capacities . . . . . . . . . . . . . . . . . . . . . . . . 25
Table 4. Steady-State Ship Procurement Rate for Fleet of 250 to 330 Ships . . . 26

Potential Navy Force Structure and
Shipbuilding Plans: Background and Issues
for Congress
Introduction and Issue for Congress
Navy and Department of Defense (DOD) officials reportedly are considering
reducing at least some parts of Navy force structure from current levels.1 In addition,
the Navy in the summer of 2004 reportedly submitted to the Office of the Secretary
of Defense a draft FY2006-FY2011 budget plan that would delay or reduce a number
of planned Navy shipbuilding programs.2 These developments, together with the
current absence of an officially approved, consensus plan for the size and structure
of the Navy, have caused concern among Members of Congress and others about
potential DOD plans for the Navy and the effect these plans might have on the
shipbuilding industrial base.3
1 Navy officials, for example, are reportedly considering reducing the force-level goals for
attack submarines and amphibious ships. For discussions, see CRS Report RL32418, Navy
Attack Submarine Force-Level Goal and Procurement Rate: Background and Issues for
Congress
, by Ronald O’Rourke, and CRS Report RL32513, Navy-Marine Corps
Amphibious and Maritime Prepositioning Ship Programs: Background and Oversight Issues
for Congress
, by Ronald O’Rourke.
2 Christopher J. Castelli, “Navy Proposes Shipbuilding Cuts, Plans Appeal To Bush For
Reforms,” Inside the Navy, August 9, 2004; Christopher J. Castelli, “Collins Warns Navy
Not To ‘Squander’ Shipbuilding Budget Progress,” Inside the Navy, August 16, 2004;
Renae Merle. “Navy Plans To Buy Fewer Ships,” Washington Post, September 7, 2004: E1.
3 See, for example, Shipbuilding Industrial Base Survey and Report. Washington, American
Shipbuilding Association, 2004. (August 2004) 8 pp.; Christopher J. Castelli, “Warner
Concerned About Possible Carrier Delay In Navy Budget,” Inside the Navy, August 23,
2004; Christopher J. Castelli, “Navy’s Latest Proposals To Slash Shipbuilding Seen As
Budget Tactics,” Inside the Navy, August 23, 2004: 1; Kathy Gambrell, “Official: DD(X)
Delay A Possible ‘Cry For Help,’” Aerospace Daily & Defense Report, August 23, 2004:
4-5; Dave Ahearn, “Sen. Warner Concerned Navy May Not Build Enough Ships,” Defense
Today
, August 26, 2004: 1; Dave Ahearn, “Fiscal 2006 Navy Shipbuilding Pace Would
Yield A 120-Vessel Fleet,” Defense Today, August 27, 2004: 1; Jason Sherman, “U.S.
Navy Plan Could Cut Swing-State Jobs,” Defense News, August 30, 2004: 4; Christopher
J. Castelli, “President Receives Defense Briefings, But Cambone’s Not Among Them,”
Inside the Navy, August 30, 2004: 1; Dale Eisman and Allison Connolly, “Shipbuilding
Lobby Raises Concerns Over Navy Cuts,” Norfolk Virginian-Pilot, September 2, 2004;
Amy Klamper, “Ships At Sea,” National Journal’s CongressDailyAM, September 8, 2004;
Kathy Gambrell, “Potential Navy Cuts ‘Foolish,’ Lott Says,” Aerospace Daily & Defense
Report
, September 17, 2004; Lorenzo Cortes. “Maine Senator Raises Concerns To Navy
(continued...)

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The issue for Congress is how to respond to the current uncertainty regarding
the planned size and structure of the Navy, the possibility of reductions in Navy ship
force structure, and the possibility of reductions or delays in planned Navy
shipbuilding programs. Decisions that Congress makes regarding Navy force
structure and shipbuilding programs could significantly affect future U.S. military
capabilities, Navy funding requirements, and the shipbuilding industrial base.
The next section of the report discusses the following background questions:
! Why is there no current, officially approved, consensus plan for the
future size and structure of the Navy?
! What are the potential implications of not having an officially
approved, consensus plan for the future size and structure of the
Navy?
! Based on press reports, what might the next Navy ship force
structure plan look like?
! Based on press reports, what might be the Navy’s new plans for
individual shipbuilding programs?
The section that follows discusses two potential issues for Congress:
! In terms of numbers of ships, how large a Navy does the United
States need, and what current force-planning issues may affect these
numbers?
! How many shipyards should be regularly involved in Navy
shipbuilding?
The final section of the report presents recent legislative activity on these issues.
3 (...continued)
Secretary Regarding FY ‘06 Budget,” Defense Daily, September 24, 2004; Dave Ahearn,
“Lieberman Sees Fighter Planes Cut, Not Canceled; Seeks More Ships,” Defense Today,
September 24, 2004: 1-2; Sharon Weinberger, “Acquisition Reductions Likely, But No
Cancellations, Lieberman Says,” Defense Daily, September 24, 2004: 1; Christopher J.
Castelli, “Lieberman Concerned About Navy’s Proposed Shipbuilding Cuts,” Inside the
Navy
, September 27, 2004; Kathy Gambrell, “Lawmakers Call On Bush To Aid Navy
Shipbuilding,” Aerospace Daily & Defense Report, September 29, 2004. See also the text
of a September 20, 2004 letter from Senator Collins to Secretary of the Navy England,
reprinted in Inside the Navy (Collins Letter To Navy Secretary On DD(X). Inside the Navy,
September 27, 2004); the text of a September 27, 2004, letter from seven Senators to
President Bush, reprinted in Inside the Navy (Senate Letter on Shipbuilding Budget, Inside
the Navy
, October 4, 2004).

CRS-3
Background
No Current, Officially Approved, Force Structure Plan
Why is there no current, officially approved, consensus plan for the future size
and structure of the Navy?

310-Ship Plan From 2001 QDR. The last force structure plan for the Navy
that was officially approved and published by the Office of the Secretary of Defense
(OSD) appeared in the report on the 2001 Quadrennial Defense Review (QDR). This
plan, like the one approved in the 1997 QDR, included 12 aircraft carriers, 116
surface combatants, 55 nuclear-powered attack submarines (SSNs),4 and 36
amphibious ships organized into 12 amphibious ready groups (ARGs) with a
combined capability to lift the assault echelons of 2.5 Marine Expeditionary Brigades
(MEBs).5 Although the 2001 QDR report did not mention a total number of ships,
this fleet was generally understood to include a total of about 310 battle force ships.6
The 2001 QDR report also stated that as DOD’s “transformation effort matures —
and as it produces significantly higher output of military value from each element of
the force — DOD will explore additional opportunities to restructure and reorganize
the Armed Forces.”7
Following the publication of the 2001 QDR report, the Navy took steps which
had the effect of calling into question the status of the 310-ship plan. In November
2001, the Navy announced a plan for procuring a new kind of small surface
combatant, called the Littoral Combat Ship (LCS), that the Navy had not previously
planned to procure, and which was not mentioned in the 2001 QDR report.8 And in
4 The plan approved in the 1997 QDR originally included 50 SSNs but was subsequently
amended to include 55 SSNs.
5 U.S. Department of Defense, Quadrennial Defense Review Report, Washington, 2001,
(September 30, 2001) p. 22.
6 Since the beginning of the Reagan Administration, the total number of ships in the Navy
has been calculated using the battle force method of counting ships. Battle force ships are
ships that are readily deployable and which contribute directly or indirectly to the deployed
combat capability of the Navy. Battle force ships include active-duty Navy ships, Naval
Reserve Force ships, and ships operated by the Military Sealift Command that meet this
standard. The total number of battle force ships includes not only combat ships but also
auxiliary and support ships — such as oilers, ammunition ships, and general stores ships —
that transport supplies to deployed Navy ships operating at sea. The total number of battle
force ships does not include ships in reduced readiness status that are not readily deployable,
ships and craft that are not generally intended for making distant deployments,
oceanographic ships operated by the National Oceanic and Atmospheric Administration
(NOAA), and DoD sealift and prepositioning ships that transport equipment and supplies
(usually for the benefit of the Army or Air Force) from one land mass to another.
7 Quadrennial Defense Review Report, op cit., p. 23.
8 For more on the LCS program, see CRS Report RS21305, Navy Littoral Combat Ship
(LCS): Background and Issues for Congress
, by Ronald O’Rourke; and CRS Report
(continued...)

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February 2003, in submitting its proposed FY2004-FY2009 Future Years Defense
Plan (FYDP) to Congress, DOD announced that it had initiated studies on undersea
warfare requirements and forcible entry options for the U.S. military. These studies
could affect, among the other things, the required numbers of SSNs and amphibious
ships. The 310-ship plan is now rarely mentioned by Navy and DOD officials.
Navy 375-Ship Proposal. Navy leaders in 2002 began to mention an
alternative proposal for a 375-ship Navy that includes several dozen LCSs not
included in the 310-ship plan. The 375-ship proposal includes 12 aircraft carriers,
55 SSNs, 4 converted Trident cruise-missile-carrying submarines (SSGNs), 160
surface combatants (including 104 cruisers, destroyers, frigates, and 56 LCSs), 37
amphibious ships, and additional mine warfare and support ships.
Although Navy leaders in 2002 and 2003 routinely referred to the 375-ship
proposal, Secretary of Defense Donald Rumsfeld, at a February 5, 2003 hearing
before the House Armed Services Committee, explicitly declined to endorse it as an
official DOD goal, leaving it a Navy proposal only. In recent months, moreover,
Navy leaders have backed away from the 375-ship proposal, stating that 375 is an
approximate figure, that the ships making up the total of 375 are subject to change,
and perhaps most important, that the 375-ship figure reflected traditional concepts
for deploying Navy ships, rather than new concepts (such as the Sea Swap concept
for long deployments with crew rotation) that could significantly reduce future
requirements for Navy ships.9 Navy officials now mention the 375-ship goal less
frequently.
In summary, neither the 310-ship plan from the 2001 QDR or the Navy’s 375-
ship proposal appear to qualify as a current, officially approved, consensus plan for
the size and structure of the Navy. Navy and DOD officials, moreover, have given
only limited indication of when they might issue such a plan as an official
replacement for the 310-ship plan from the 2001 QDR.10
Reasons For Planning Uncertainty. One potential reason why Navy and
DOD officials have not announced a new force structure plan is that they are
8 (...continued)
RL32109, Navy DD(X) and LCS Ship Acquisition Programs: Oversight Issues and Options
for Congress
, by Ronald O’Rourke.
9 For more on Sea Swap and other new approaches for deploying Navy ships, see CRS
Report RS21338, Navy Ship Deployments: New Approaches — Background and Issues for
Congress
, by Ronald O’Rourke.
10 An August 2004 article stated:
Asked when he will reach a decision on a new fleet size figure, [Chief of Naval
Operations Vernon] Clark said, “It will evolve over the course of the next year,
because this is embedded in the campaign analysis” from two wars in the past
three years and a major naval exercise.
(Dave Ahearn, “Clark Says Fleet Size Decision May Take Another Year,” Defense Today,
August 6, 2004: 1, 4.)

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currently working to define more precisely certain new capabilities they want the
Navy to have. Examples of such capabilities include sea-based ballistic missile
defense and the new sea basing concept for conducting expeditionary operations
ashore. The current vision for missile defense includes a role for Navy forces, but
the exact nature of that role is not yet well defined.11 Similarly, Navy and DOD
officials are supportive of the new sea basing concept for conducting expeditionary
operations ashore, but are still working to define the concept in greater detail.12
A second potential reason why Navy and DOD officials have not announced a
new force structure plan is that, once a desired collection of Navy capabilities is
defined, the metrics for translating those capabilities into numbers of ships and
aircraft are shifting due to new concepts such as network-centric warfare (NCW) and
Sea Swap. NCW refers to using computer networking technology to link individual
military units into a series of local- and wide-area networks for rapidly transmitting
critical data. Although implementing NCW is expected to improve, perhaps
dramatically, the warfighting ability of U.S. forces, the implications of NCW for the
design and capability of individual U.S. military platforms (such as ships) are not yet
fully understood.13 Sea Swap refers to the Navy’s new plan for sending ships on
long-duration deployments during which the ships are operated by multiple crews
that are sent out to the ships on a rotational basis. Although Sea Swap is understood
to have the potential for reducing the total number of ships of a given kind that are
needed to keep a certain number of that kind forward deployed in an overseas
operating area, the kinds of Navy ships for which Sea Swap might be suitable, and
the exact extent of the resulting reduction in required numbers of ships, is not yet
clear.14
A third potential reason why Navy and DOD officials have not announced a new
force structure plan is that Navy and DOD officials may find it convenient for their
own purposes to not announce such a plan. In the absence of a current, officially
approved, consensus plan for the size and structure of the Navy, Navy and DOD
officials are free to speak broadly about individual Navy acquisition programs
without offering many quantitative details about them — details which they might
11 For more discussion, see CRS Report RL31111, Missile Defense: The Current Debate,
Coordinated by Steven A. Hildreth.
12 For more on the sea basing concept, see CRS Report RS20851, Naval Transformation:
Background and Issues for Congress
, by Ronald O’Rourke, and CRS Report RL32513,
Navy-Marine Corps Amphibious and Maritime Prepositioning Ship Programs: Background
and Oversight Issues for Congress
, by Ronald O’Rourke.
13 For more on NCW in general, see CRS Report RL32411, Network Centric Warfare:
Background and Issues for Congress
, by Clay Wilson, CRS Report RL32238, Background
and Oversight Issues for Congress
, by Ronald O’Rourke. For more on naval programs
involved in NCW, see CRS Report RS20557, Navy Network-Centric Warfare Concept: Key
Programs and Issues for Congress
, by Ronald O’Rourke.
14 For more on Sea Swap, see CRS Report RS21338, Navy Ship Deployments: New
Approaches — Background and Issues for Congress
, by Ronald O’Rourke. For an article
discussing Sea Swap and other issues the Navy is examining to work toward a new force-
structure plan, see Dave Ahearn, “Clark Says Fleet Size Decision May Take Another Year,”
Defense Today, August 6, 2004: 1, 4.

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be held accountable to later, or which, if revealed now, might disappoint Members
of Congress or industry officials. If this is a reason why Navy and DOD officials
have not announced a new force structure plan for the Navy, then such a plan might
not be issued until Congress directs DOD to do so.
Capabilities-Based Planning. DOD in recent years has altered the basis of
its force planning, shifting from threat-based planning to capabilities-based planning.
Under threat-based planning, DOD planned its forces based on what would be needed
for conflict scenarios that were defined fairly specifically. During the Cold War, for
example, DOD planned forces that would be sufficient, in conjunction with allied
NATO forces, for fighting a multi-theater conflict with the Soviet Union and its
Warsaw Pact allies. Similarly, in the first few years of the post-Cold War era, DOD
planned forces that would be sufficient for, among other things, fighting two nearly
simultaneous regional conflicts, one in the Persian Gulf region, the other on the
Korean peninsula.
Under capabilities-based planning, DOD is now planning for U.S. military
forces to have a variety of abilities, so that they will be better able to respond to a
wide array of possible conflict scenarios. DOD officials have explained that the shift
to capabilities-based planning responds to the difficulty of predicting, in today’s
security environment, specific future threats and warfighting scenarios.
When asked in recent months about required numbers of Navy ships and
aircraft, Navy and DoD officials have sometimes argued that under capabilities-based
planning, numbers of ships and aircraft per se are not as important as the total amount
of capability represented in the fleet. That may be correct insofar as the policy
objective is to have a Navy with a certain desired set of capabilities, and not simply
one that happens to include a certain number of ships and aircraft. But that is not the
same as saying that a Navy with a desired set of capabilities cannot in turn be
described as one having certain numbers of ships and aircraft of certain types.
Although the force-planning implications of issues such as sea-based missile
defense, the sea basing concept, network-centric warfare, and Sea Swap are not
currently understood in all their details, with further study of these issues, it arguably
should become possible at some point to define a set of desired Navy capabilities
with some clarity, and to translate those desired capabilities into desired numbers of
ships and aircraft. Those numbers might be expressed as ranges rather than specific
figures, and they may change over time as missions and technologies change. But
to argue indefinitely that desired naval capabilities cannot be translated into desired
numbers of ships and aircraft would be to suggest that the Navy cannot measure and
understand the capabilities of its own ships and aircraft. In this sense, the shift to
capability-based planning does not in itself constitute a rationale for permanently
setting aside the question of the planned size and structure of the fleet.
Implications of Not Having A Current Plan
What are the potential implications of not having an officially approved,
consensus plan for the future size and structure of the Navy?


CRS-7
The absence of a current, officially approved, consensus plan for the future size
and structure of the Navy has potential implications for both Congress and industry.
For Congress. The absence of such a plan may make it difficult, if not
impossible, for Congress to conduct effective oversight by reconciling desired Navy
capabilities with planned Navy force structure, and planned Navy force structure with
supporting Navy programs and budgets. With the middle element of this oversight
chain missing, Congress may find it difficult to understand whether proposed
programs and budgets will produce a Navy with DOD’s desired capabilities. The
defense oversight committees in recent years have criticized the Navy for presenting
a confused and changing picture of Navy ship requirements and procurement plans.15
For Industry. In the absence of a current, officially approved, consensus force
structure plan, industry officials might be tempted to pour into broad remarks from
DOD or the Navy their own hopes and dreams for individual programs. This could
lead to excessive industry optimism about those programs. Uncertainty in Navy
planning can also cause business-planning uncertainty in areas such as production
15 For example, the conference report (H.Rept. 107-772 of November 12, 2002) on the
FY2003 defense authorization act (P.L. 107-314/H.R. 4546) stated
In many instances, the overall Department of Defense ship acquisition
message is confused.... The conferees also believe that the DON shares blame
for this confusion because it has been inconsistent in its description of force
structure requirements. This situation makes it appear as if the Navy has not
fully evaluated the long-term implications of its annual budget requests....
The conferees perceive that DOD lacks a commitment to buy the number and
type of ships required to carry out the full range of Navy missions without
redundancy. The DON has proposed to buy more ships than the stated
requirement in some classes, while not requesting sufficient new hulls in other
classes that fall short of the stated requirement. Additionally, the conferees
believe that the cost of ships will not be reduced by continually changing the
number of ships in acquisition programs or by frequently changing the
configuration and capability of those ships, all frequent attributes of recent DON
shipbuilding plans. (Pages 449 and 450)
The House Appropriations Committee, in its report (H.Rept. 108-553 of June 18, 2004)
on the FY2005 DOD appropriations bill (H.R. 4613), stated:
The Committee remains deeply troubled by the lack of stability in the Navy’s
shipbuilding program. Often both the current year and out year ship construction
profile is dramatically altered with the submission of the next budget request.
Programs justified to Congress in terms of mission requirements in one year’s
budget are removed from the next. This continued shifting of the shipbuilding
program promotes confusion and frustration throughout both the public and
private sectors. Moreover, the Committee is concerned that this continual
shifting of priorities within the Navy’s shipbuilding account indicates uncertainty
with respect to the validity of requirements and budget requests in support of
shipbuilding proposals. (Page 164)

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planning, workforce management, facilities investment, and potential mergers and
acquisitions.16
Potential Features of Next Navy Force Structure Plan
Based on press reports, what might the next Navy ship force structure plan look
like?

According to press reports, Navy and DOD officials are considering reducing
the attack submarine force level goal from 55 down to something in the low to mid-
40s, or perhaps as low as 37, and the planned number of expeditionary strike groups
(ESGs) from 12 down to 10, 9, or 8 Since each ESG currently includes three
amphibious ships, this suggests that the total number of amphibius ships might be
reduced from 36 down to 30, 27, or 24. In conjunction with its plans for amphibious
ships, the Navy reportedly is leaning toward building two Maritime Prepositioning
Force (Future), or MPF(F), squadrons, each with perhaps 5 to 8 ships, for a total of
10 to 16 MPF(F) ships.17 It has also been reported that the number of aircraft carriers
may be reduced, at least temporarily, from 12 to 11.18
16 A July 2004 press article, for example, states that
Philip Dur, chief executive officer of Northrop Grumman’s Shipbuilding
Systems, argued that the Navy’s concept of “capabilities versus numbers” not
only would hurt the service’s operations, but decimate the industry.
If the Navy decides it cannot afford 300 ships, it should come up with a
smaller number and set new ship construction plans based on that number, Dur
said.
It also would be helpful, he added, if both the Navy and the Coast Guard
jointly planned their long-term shipbuilding buys. “I do not know that either
service takes the other service’s capabilities into account,” he said. If both
services set their shipbuilding goals collectively, “then the shipbuilders can lay
out an investment plan, a hiring plan [and] a training plan that was predicated on
the assumption that we would competing for an X-number of platforms per year
on a going-forward basis,” Dur said....
If the Department of Defense can frame a requirement for ships and defend
it, the industry would make the necessary adjustments to either scale down or
ramp up, Dur told reporters during a recent tour of the company’s shipyards in
Louisiana and Mississippi.
(Roxana Tiron, “Lack of Specificity in Navy Shipbuilding Plans Irks the Industry,”
National Defense, July 2004.)
17 For discussions, see CRS Report RL32418, Navy Attack Submarine Force-Level Goal and
Procurement Rate: Background and Issues for Congress
, by Ronald O’Rourke, and CRS
Report RL32513, Navy-Marine Corps Amphibious and Maritime Prepositioning Ship
Programs: Background and Oversight Issues for Congress
, by Ronald O’Rourke.
18 Jason Sherman, “Memorandum Outlines Services’ Funding Plans,” Air Force Times,
August 23, 2004: 12; Dave Ahearn, “Sen. Warner Concerned Navy May Not Build Enough
(continued...)

CRS-9
There has been less reporting on possible Navy plans for surface combatants,
but there are at least two indications that Navy and DOD officials may be considering
reducing planned force levels for these ships as well. First, although the precise
effect of the Sea Swap concept on reducing force-level requirements has yet to be
determined, the Navy began experimenting with Sea Swap on surface combatants and
appears to view these ships as among those most suitable for the concept. Second,
the long-term Navy shipbuilding plan that the Navy submitted to Congress in 2003
showed a production rate of about two DD(X) destroyers or CG(X) cruisers per year
extending through FY2030, the final year covered in the plan. Assuming an average
35-year life for destroyers and cruisers, a two-per-year procurement rate, if
maintained over the long run, would eventually result in a force of about 70 larger
surface combatants, which is less than the 116 surface combatants in the 310-ship
plan from the 2001 QDR, the 104 larger surface combatants included in the Navy’s
375-ship proposal, and 103 surface combatants in service at the end of FY2004.
Since submarines, aircraft carriers, surface combatants, and amphibious ships
are the four major categories of combat ships that traditionally have helped to define
the size and structure of the Navy, potential reductions in force levels among these
ships can be used to prepare notional estimates of what the next Navy force structure
plan might look like. As shown in Table 1 below, for total fleet size, those estimates
range from about 250 ships to about 330 ships. The figure of about 250 ships results
from using lower potential numbers for various force structure elements, while the
figure of about 330 ships results from using higher potential numbers for various
elements.
Table 1 on the next page compares notional fleets of about 250 and 330 ships
to the 310-ship plan from the 2001 QDR and the Navy’s 375-ship proposal. It should
be emphasized that the two notional plans are meant to be illustrative. The next
officially approved Navy force structure plan will likely differ from the 250- and 330-
ship plans shown here. In addition, these notional plans are not an estimate of the
size of the fleet that the Navy might be able to afford in coming years, but of what
the Navy and DOD might state is required to produce a fleet with desired capabilities.
18 (...continued)
Ships,” Defense Today, August 26, 2004: 1. See also “Rumsfeld Says Navy Can Operate
With Fewer Carrier Groups,” Defense Today, September 24, 2004: 1.

CRS-10
Table 1. Notional Possibilities for the Next Navy Force
Structure Plan
(compared to 310-ship plan and 375-ship proposal)
Notional future
310-ship
Navy
plans
plan from
375-ship
About
About
2001 QDR
proposal
250
330
Ship type
ships
ships
Ballistic missile submarines (SSBNs)
14
14
14
14
Cruise missile submarines (SSGNs)
2 or 4a
4
4
4
Attack submarines (SSNs)
55
55
37
50
Aircraft carriers
12
12
11
12
Cruisers, destroyers, frigates
116
104
70b
84c
Littoral Combat Ships (LCSs)
0
56
30d
45e
Amphibious ships
36
37
24
36
Maritime prepositioning ships
0f
0f
10f
16f
Combat logistics ships
34
42
30
34
Command and support ships
25
25
20
25
Dedicated mine warfare ships
16
26g
0h
8h
TOTAL battle force ships
310 or 312
375
250
328
Source: Press reports, except as otherwise noted in footnotes below.
a The report on the 2001 QDR did not mention a specific figure for SSGNs. The Administration’s
proposed FY2001 DOD budget requested funding to support the conversion of two available Trident
SSBNs into SSGNs, and the retirement of two other Trident SSBNs. Congress, in marking up this
request, supported a plan to convert all four available SSBNs into SSGNs.
b The two-per-year procurement rate for DD(X) destroyers and CG(X) cruisers shown in the Navy
long-range shipbuilding plan delivered to Congress in 2003 would, if maintained over the long run,
eventually result in a force of 70 larger surface combatants.
c Replacing the 62 DDG-51 class Aegis destroyers procured through FY2005 and the final 22 CG-47
class Aegis cruisers on a one-for-one basis (while retiring the first 5 Aegis cruisers, as planned by the
Navy) would maintain a force of 84 larger combatants.
d This is the lower end of the range of about 30 to 60 ships that Navy officials have sometimes
mentioned as the potential total procurement quantity for the LCS program.
e This is half-way between the lower and higher ends of the range of about 30 to 60 ships that Navy
officials have sometimes mentioned as the potential total procurement quantity for the LCS program.
The higher end was associated with the Navy’s 375-ship proposal.
f Today’s 16 Maritime Prepositioning Force (MPF) ships are intended primarily to support Marine
Corps operations ashore, rather than Navy combat operations, and thus are not counted as Navy battle
force ships. The Navy’s planned MPF(Future) ships, however, may be capable of contributing to
Navy combat capabilities (for example, by supporting Navy aircraft operations). For this reason, the
10 to 16 MPF(F) ships that may be built in coming years are counted here as battle force ships.
g The figure of 26 dedicated mine warfare ships appears to include 10 ships maintained in a reduced
mobilization status called Mobilization Category B. Ships in this status are not readily deployable and
thus do not count as battle force ships. The 375-ship proposal thus implied transferring these 10 ships
to a higher readiness status.
h The figure of 0 dedicated mine warfare ships assumes that mine warfare duties are completely taken
over by the 30 LCSs (for whom mine warfare is one of three primary stated missions) and by other
ships (such as six DDG-51 destroyers) equipped with so-called organic (i.e., built-in) mine warfare
systems. The figure of 8 mine warfare ships (which is half-way between 0 and the 16 in the 310-ship
plan) assumes that, even with 45 LCSs and some other ships equipped with organic mine warfare
capability, a few dedicated mine warfare ships are determined to be needed.

CRS-11
Potential Navy Plans for Shipbuilding Programs
Based on press reports, what might be the Navy’s new plans for individual
shipbuilding programs?

Table 2 below shows the draft FY2006-FY2011 shipbuilding plan that the Navy
reportedly submitted to OSD during the summer of 2004.19 Differences between this
draft plan and the Navy’s previous (FY2005-FY2009) shipbuilding plan, which the
Navy submitted to Congress in February 2004, are indicated by showing figures from
the previous plan in parentheses.20 The FY2005 column is included to show how
congressional action on the DD(X) destroyer program in FY2005 changed the
nominal profile for that program. The table also includes a line providing the total
number of ships other than LCSs. LCSs are scheduled to be built in shipyards other
than the six shipyards that have built the Navy’s major warships in recent years.
Table 2. Draft Navy Shipbuilding Plan for FY2006-FY2011
(Figures from previous plan shown in parentheses; FY2005 shown for reference)
Total
FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2006-
FY2011
CVN-21
0
0
(1) 0
(0) 1
0
0
(1) 0
(2) 1
SSN-774
1
1
1
1
2
2
2
9
CG(X)
0
0
0
0
0
0
(0) 1
(0) 1
DDG-51
3
0
0
0
0
0
0
0
DD(X)
(1) 0
0
(2) 1
(2) 1
(3) 2
2
(2) 1
(11) 7
LCS
1
(2) 1
(1) 2
3
(6) 5
5
5
(22) 21
LPD-17
1
1
1
1
(1) 0
(1) 0
(1) 0
(6) 3
LHA(R)
0
0

(0) 1

(1) 0
0
1
0
2
TAKE
2

(2) 1
1

(0) 1
0
0
0
3
TAOE(X)
0
0
0
0
(2) 1
(2) 1
(0) 2
4
19 Table entitled “Navy’s Proposed FY-05 Shipbuilding Plan (Compared to president’s FY-
05 budget request),” as printed in Inside the Navy, August 16, 2004: 5. The table as printed
in the magazine also included line items for additional items such as high-speed connectors
(or HSCs — a new term for fast transport ships), aircraft carrier refueling complex
overhauls (RCOHs), attack submarine (SSN) engineering refueling overhauls (EROs),
ballistic missile submarine (SSBN) EROs, a new type of amphibious landing craft called the
LCH(X), and a new type of air-cushioned landing craft (LCAC) called the LCAC(X).
20 Although the FY2005-FY2009 plan did not cover FY2010 and FY2011, the table as
printed in Inside the Navy includes figures for these years. These figures might reflect
previous internal Navy planning for those years.

CRS-12
Total
FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2006-
FY2011
MPF(F)
0
0
(1) 0
0
(2) 1
(2) 1
2
(7) 4
MPF(A)
0
0
0
0

(1) 0
0
0

(1) 0
TOTAL
(9) 8
(6) 4
(8) 7
(9) 8
(17) 11
(15) 12
13
(68) 55
TOTAL
(8) 7
(4) 3
(7) 5
(6) 5
(11) 6
(10) 7
8
(46) 34
less LCSs
Source: Inside the Navy, August 16, 2004: 5.
The following discusses the changes between this reported draft shipbuilding
plan and the previous shipbuilding plan.
Overall Ship Procurement Rate. Under the draft Navy plan, for the period
FY2006-FY2011, the total number of ships to be procured would be reduced from
68, or an average of about 11.3 ships per year, to 55, or an average of about 9.2 ships
per year. Assuming an average Navy ship life of 30 to 35 years, an average
procurement rate of about 11.3 ships per year would, over the long run, maintain a
fleet of 340 to 397 ships, while an average procurement rate of about 9.2 ships per
year would, over the long run, maintain a fleet of 275 to 321 ships.
Excluding LCSs so as to focus on ships that would likely be built by the six
yards that have built the Navy’s major warships in recent years,21 the total number of
ships to be built would be reduced from 46, or an average of about 7.7 ships per year,
to 34 under the draft plan, or an average of about 5.7 ships per year. Assuming an
average Navy ship life of 30 to 35 years, an average procurement rate of about 7.7
ships per year other than LCSs would, over the long run, maintain a fleet that
included 230 to 268 ships other than LCSs, while an average procurement rate of
about 5.7 ships per year other than LCSs would, over the long run, maintain a fleet
that included 170 to 198 ships other than LCSs.
Individual Shipbuilding Programs.
CVN-21 Aircraft Carrier Program. The draft Navy plan defers the
procurement of the next aircraft carrier, called CVN-21, by a year, to FY2008. This
may have been due to need to finance the procurement in FY2007 of the lead DD(X)
destroyer and the LHA(R) amphibious assault ship. The draft Navy plan also defers
21 These six yards include Bath Iron Works (BIW) of Bath, ME, the Electric Boat Division
of Groton, CT, and Quonset Point, RI, and National Steel and Shipbuilding Company
(NASSCO) of San Diego, CA, all of which are owned by General Dynamics Corporation;
and Avondale Shipyards near New Orleans, LA, Ingalls Shipbuilding of Pascagoula, MS,
and Newport News Shipbuilding of Newport News, VA, all of which are owned by
Northrop Grumman Corporation.

CRS-13
the procurement of the carrier after CVN-21 from FY2011 to some future fiscal
year.22
SSN-774 Attack Submarine Program. The draft Navy plan does not
change the procurement profile for the Virginia (SSN-774) class attack submarine
program.23
CG(X) Cruiser Program. The draft Navy plan would accelerate the
procurement of the first CG(X) cruiser to FY2011. The long-range shipbuilding plan
that the Navy submitted to Congress in 2003 showed the first CG(X) cruiser being
procured in FY2018.24
DDG-51 Destroyer Program. The draft Navy plan does not change the
procurement profile for the Arleigh Burke (DDG-51) class Aegis destroyer program.
This profile calls for the three DDG-51s procured in FY2005 to be the last ships in
the program.
DD(X) Destroyer Program. The table suggests that the draft Navy plan
defers the procurement of the lead DD(X) destroyer by two years, to FY2007. The
actual effect of the draft Navy plan on the schedule for building this ship, however,
may be less dramatic. The Navy’s FY2005 budget submission proposed funding the
construction of the lead DD(X) in the Navy’s research and development account
through a stream of annual funding increments stretching out to FY2011 — an
approach commonly known as incremental funding. Under this proposed scheme,
the Navy had some flexibility to choose which year to record as the nominal year of
procurement for the lead DD(X). The Navy chose FY2005, the year of the first
scheduled increment, even though the amount of funding requested for the FY2005
increment equated to only about 8% of the ship’s total cost, leaving the remaining
92% of the ship’s cost to be provided in future years.
Congress, in acting on the Navy’s proposed FY2005 budget, approved the
Navy’s FY2005 funding request for the lead DD(X) but directed that the ship be
procured the traditional way, through the Navy’s shipbuilding account (known
formally as the Shipbuilding and Conversion, Navy, or SCN, account), and that the
ship be funded the traditional way, in accordance with the full funding policy, which
requires that items acquired through the procurement title of the DOD appropriation
act be fully funded in the year they are procured.25 Consistent with this direction, the
22 For more on the CVN-21 program, see CRS Report RS20643, Navy CVN-21 Aircraft
Carrier Program: Background and Issues for Congress
, by Ronald O’Rourke.
23 For more on the SSN-774 program, see CRS Report RL32418, Navy Attack Submarine
Force-Level Goal and Procurement Rate: Background and Issues for Congress
, by Ronald
O’Rourke.
24 For more on the CG(X) program, see CRS Report RL32109, Navy DD(X) and LCS Ship
Acquisition Programs: Oversight Issues and Options for Congress
, by Ronald O’Rourke.
25 For more on the full funding policy, see CRS Report RL31404, Defense Procurement:
Full Funding Policy — Background, Issues, and Options for Congress
, by Ronald O’Rourke
(continued...)

CRS-14
FY2005 funding increment was designated as advance procurement (AP) funding for
a ship to be procured in some future fiscal year.
Abiding by this direction will require the Navy to alter its funding profile for the
lead DD(X) to one that fully funds the ship in a particular year. The draft Navy plan
suggests that the Navy, after examining its options, selected FY2007 as the year in
which the ship would be fully funded. It is not clear, however, whether the actual
schedule for building the lead ship will be significantly affected by this change in
funding profile and nominal year of procurement. Consequently, although the
nominal year of procurement for the lead DD(X) appears to have been deferred two
years, this may overstate the actual amount of change in the schedule for the lead
ship.
The draft Navy plan does, however, defer the procurement of the second DD(X)
by a year, to FY2008, and reduces to seven the total number of DD(X)s to be
procured through FY2011. Under previous plans, the Navy envisioned stopping
DD(X) procurement at about the time that it started CG(X) procurement. If the lead
CG(X) is procured in FY2011, as shown in the draft Navy plan, and there is a gap
year in FY2012 between the procurement of the lead CG(X) and follow-on CG(X)s
starting in FY2013, then two final DD(X)s might be procured in FY2012. If so, then
the total procurement quantity for the DD(X) program would be nine ships, which
could be viewed as consistent with a plan to provide one DD(X) for each of nine
ESGs.26
Littoral Combat Ship (LCS) Program. The draft Navy plan defers
procurement of the third LCS by a year, to FY2007. This is consistent with
Congress’ direction, in acting on the Navy’s FY2005 budget request, to fully fund a
lead LCS in FY2005 but require a gap year between the procurement of a lead LCS
and any follow-on LCSs built to that same design. The Navy plans to procure two
lead LCSs to different designs developed by two competing industry teams. Under
the Navy’s draft plan, the single ship now planned for FY2006 would presumably be
the second lead LCS, and the two LCSs now planned for FY2007 would presumably
be follow-on ships built to the same design as the lead LCS procured in FY2005.
The draft plan would also reduce the number of LCSs procured in FY2009 from six
ships to five. This can be viewed as consistent with the Navy’s longer-range
projection for the LCS program, which has envisioned a sustaining procurement rate
of five ships per year through the end of the program, as shown by the figures for
FY2010 and FY2011.27
25 (...continued)
and Stephen Daggett.
26 For more on the DD(X) program, see CRS Report RS21059, Navy DD(X) Destroyer
Program: Background and Issues for Congress
, by Ronald O’Rourke; and CRS Report
RL32109, Navy DD(X) and LCS Ship Acquisition Programs: Oversight Issues and Options
for Congress
, by Ronald O’Rourke.
27 For more on the LCS program, see CRS Report RS21305, Navy Littoral Combat Ship
(LCS): Background and Issues for Congress
, by Ronald O’Rourke; and CRS Report
RL32109, Navy DD(X) and LCS Ship Acquisition Programs: Oversight Issues and Options
(continued...)

CRS-15
LPD-17 Amphibious Ship Program. The draft Navy plan shows the
elimination of three San Antonio (LPD-17) class amphibious ships from the period
FY2009-FY2011. This is somewhat confusing, since procuring these three ships
would result in a total procurement of 13 LPD-17s, whereas previous Navy plans
called for procuring a total of 12 LPD-17s, with the final LPD-17 being procured in
FY2010. Either way, if the final LPD-17 is procured in FY2008, as shown in the
draft plan, a total of 10 LPD-17s would be procured. A figure of 10 LPD-17s could
be viewed as consistent with a plan to provide one LPD-17 for each of 10 ESGs.28
According to a September, 2004 press article, Secretary of the Navy Gordon England
expressed a firm commitment to procure nine LPD-17s but was noncommittal about
building any additional LPD-17s beyond that.29
LHA(R) Amphibious Ship Program. The draft Navy plan would accelerate
the procurement of LHA(R), an amphibious assault ship, by one year, to FY2007.
Although the Navy’s FY2005-FY2009 shipbuilding plan scheduled procurement of
LHA(R) for FY2008, its previous (i.e., FY2004-FY2009) shipbuilding plan, which
the Navy submitted to Congress in February 2003, showed LHA(R) in FY2007.
Accelerating procurement of LHA(R) to FY2007 can thus be viewed as restoring the
year of procurement shown in the plan submitted to Congress in 2003.30
TAKE Auxiliary Cargo Ship Program. The draft Navy plan effectively
defers one of the two Lewis and Clark (TAKE-1) class auxiliary cargo ships
previously planned for FY2006 to FY2008.
TAOE(X) Replenishment Ship Program. The draft Navy plan would
reduce procurement of new TAOE(X) auxiliary underway replenishment ships to one
ship per year in FY2009 and FY2010, deferring the two additional ships previously
planned for these years to FY2011.
MPF(F) Maritime Prepositioning Ship (Future) Program. The draft
Navy plan would defer procurement of the first Maritime Prepositioning Force
(Future) ship by two years, to FY2009, and reduce the total number of MPF(F)s
procured through FY2011 from seven (plus one additional MPF(A) ship; see next
item below) to four.31
27 (...continued)
for Congress, by Ronald O’Rourke.
28 For more on the LPD-17 program, see CRS Report RL32513, Navy-Marine Corps
Amphibious and Maritime Prepositioning Ship Programs: Background and Oversight Issues
for Congress
, by Ronald O’Rourke.
29 Keith Darce, “Navy Commits To Building 9 Warships,” New Orleans Times-Pacayune,
September 11, 2004.
30 For more on the LHA(R) program, see CRS Report RL32513, Navy-Marine Corps
Amphibious and Maritime Prepositioning Ship Programs: Background and Oversight Issues
for Congress
, by Ronald O’Rourke.
31 For more on the MPF(F) program, see CRS Report RL32513, op cit.

CRS-16
MPF(A) Maritime Prepositioning Ship (Aviation) Program. Previous
Navy plans distinguished between the basic MPF(F) ship and an aviation variant
called MPF(A). The draft Navy plan either cancels the MPF(A) effort or ends the
distinction by folding the MPF(A) back into the MPF(F) program.
Issues for Congress
Number of Ships in the Navy
In terms of numbers of ships, how large a Navy does the United States need,
and what current force-planning issues may affect these numbers?

Capabilities-Based Planning and Numbers of Ships. As a result of the
shift to capabilities-based planning, Navy and DOD officials are seeking to acquire
a Navy with a certain set of desired capabilities, rather than a Navy that happens to
have a certain number of ships and aircraft. As discussed in the Background section,
however, once the Navy and DOD identify a desired set of capabilities for the Navy,
it should become possible at some point to translate those desired capabilities into
a force structure plan for a Navy that includes numbers of ships and aircraft, although
those numbers might be expressed as ranges rather than discrete figures. In this
sense, even under capabilities-based planning, it is legitimate to ask Navy and DOD
officials how large a Navy they are planning in terms of numbers of ships. When the
Navy and DOD provide a force structure plan with these numbers, Congress will
have an opportunity to assess its adequacy.
Historical Fleet Numbers As A Yardstick. Historical figures for the total
number of ships in the Navy are not necessarily a reliable yardstick for assessing the
adequacy of today’s Navy or a future planned Navy that includes a certain number
of ships, particularly if the historical figures are more than a few years old, because
the missions to be performed by the Navy, the mix of ships that make up the Navy,
and the technologies that are available to Navy ships for performing missions all
change over time. Due to changes in these variables, the historical number of ships
in the fleet is at best a partial guide, and at worst a potentially misleading guide, to
whether today’s Navy is adequate, or a future Navy that includes a certain number
of ships would be adequate, for performing its required missions.
The Navy, for example, reached a late-Cold War peak of 568 battle force ships
at the end of FY1987,32 and as of October 21, 2004 had declined to a total of 289
32 Some publications, such as those of the American Shipbuilding Association, state that the
Navy reached a peak of 594 ships at the end of FY1987. This figure, however, is the total
number of active ships in the fleet, which is not the same as the total number of battle force
ships. In recent years, the total number of active ships has been larger than the total number
of battle force ships. For example, the Naval Historical Center states that as of November
16, 2001, the Navy included a total of 337 active ships, while the Navy states that as of
November 19, 2001, the Navy included a total of 317 battle force ships. Although the total
number of battle force ships as of October 6, 2004 was 290, the total number of active ships
(continued...)

CRS-17
battle force ships. The FY1987 fleet, however, was intended to meet a set of mission
requirements that focused on countering Soviet naval forces at sea during a potential
multi-theater NATO-Warsaw Pact conflict, while the October 2004 fleet is intended
to meet a considerably different set of mission requirements centered on influencing
events ashore by countering both land- and sea-based military forces of potential
regional threats other than Russia, including non-state terrorist organizations. In
addition, the Navy of FY1987 differed substantially from the October 2004 fleet in
areas such as profusion of precision-guided air-delivered weapons, numbers of
Tomahawk-capable ships, and sophistication of C4ISR systems.33
Fifteen or so years from now, Navy missions may have shifted again, to include,
as a possible example, a greater emphasis on being able to counter Chinese maritime
military capabilities. In addition, the capabilities of Navy ships will likely have
changed further by that time due to developments such as more comprehensive
implementation of networking technology and increased use of ship-based unmanned
vehicles.
The 568-ship fleet of FY1987 may or may not have been capable of performing
its stated missions; the 289-ship fleet of October 2004 may or nor may not be capable
of performing its stated missions; and a fleet 15 or so years from now with a certain
number of ships may or may not be capable of performing its stated missions. Given
changes over time in mission requirements, ship mixes, and technologies, however,
these three issues are to a substantial degree independent of one another.
For similar reasons, trends over time in the total number of ships in the Navy are
not necessarily a reliable indicator of the direction of change in the fleet’s ability to
perform its stated missions. An increasing number of ships in the fleet might not
necessarily mean that the fleet’s ability to perform its stated missions is increasing,
because the fleet’s mission requirements might be increasing more rapidly than ship
numbers and average ship capability. Similarly, a decreasing number of ships in the
fleet might not necessarily mean that the fleet’s ability to perform stated missions is
decreasing, because the fleet’s mission requirements might be declining more rapidly
than numbers of ships, or because average ship capability and the percentage of time
that ships are in deployed locations might be increasing quickly enough to more than
offset reductions in total ship numbers.
Previous Force Structure Plans As A Yardstick. Previous Navy force
structure plans might provide some insight into the potential adequacy of a proposed
new force-structure plan, but changes over time in mission requirements,
32 (...continued)
as of this date was likely more than 300. Comparing the total number of active ships in one
year to the total number of battle force ships in another year is thus an apple-to-oranges
comparison that in this case overstates the decline since FY1987 in the number of ships in
the Navy. As a general rule to avoid potential statistical distortions, comparisons of the
number of ships in the Navy over time should use, whenever possible, a single counting
method.
33 C4ISR stands for command and control, communications, computers, intelligence,
surveillance, and reconnaissance.

CRS-18
technologies available to ships for performing missions, and other force-planning
factors suggest that some caution should be applied in using past force structure plans
for this purpose. The Reagan-era plan for a 600-ship Navy was designed for a Cold
War set of missions focusing on countering Soviet naval forces at sea, which is not
an appropriate basis for planning the Navy today, while more recent Navy force-
structure plans, including the Navy’s 375-ship proposal, do not appear to reflect
potential changes now being discussed by Navy officials, such as additional forward
homeporting of ships, widespread application of the Sea Swap concept, and
implementation of the new sea basing concept for conducting expeditionary
operations ashore.34
Current Force-Planning Issues. Current force-planning issues that
Congress may consider in assessing how large a Navy the United States needs
include the following:
! sea-based missile defense;
! the sea basing concept for conducting expeditionary operations
ashore;
34 Recent Navy force structure plans include the Reagan-era 600-ship plan of the 1980s, the
Base Force fleet of more than 400 ships planned during the final two years of the George
H. W. Bush Administration, the 346-ship fleet from the Clinton Administration’s 1993
Bottom-Up Review (or BUR, sometimes also called Base Force II), the 310-ship fleets of
the Clinton Administration’s 1997 QDR and the George W. Bush Administration’s 2001
QDR, and the Navy’s 375-ship proposal. The table below summarizes some key features
of these plans.
Features of Recent Navy Force Structure Plans
1993
375-ship
Plan
600-ship
Base Force
1997 QDR 2001 QDR
BUR
proposal
TOTAL ships
~600
~450/416a
346
~305/310b
~310
375
Attack submarines
100
80/~55c
45-55
50/55d
55e
55e
Aircraft carriers
15f
12
11+1g
11+1g
12
12
Surface combatants
242/228h
~150
~124
116
116
160i
Amphibious ships
~75j
51k
36k
36k
36k
37
Source: Prepared by CRS based on DOD and U.S. Navy data.
a Commonly referred to as 450-ship plan, but called for decreasing to 416 ships by end of FY1999.
b Original total of about 305 ships was increased to about 310 due to increase in number of attack
submarines to 55 from 50.
c Plan originally included 80 attack submarines, but this was later reduced to about 55.
d Plan originally included 50 attack submarines but this was later increased to 55.
e Plus 2 or 4 additional converted Trident cruise missile submarines (SSGNs) for the 2001 QDR plan
and 4 additional SSGNs for the 375-ship proposal.
f Plus one additional aircraft carrier in the service life extension program (SLEP).
g 11 active carriers plus 1 operational reserve carrier.
h Plan originally included 242 surface combatants but this was later reduced to 228.
i Figure includes 56 LCSs. Other plans shown include no LCSs.
j Number needed to lift assault echelons of 1 Marine Expeditionary Force (MEF) plus 1 Marine
Expeditionary Brigade (MEB).
k Number needed to lift assault echelons of 2.5 MEBs. Note how number needed to meet this goal
changed from Base Force plan to the BUR plan — a result of new, larger amphibious ship designs.

CRS-19
! naval requirements for the global war on terrorism and for irregular
conflicts such as insurgencies;
! naval requirements to address the possible emergence over the next
10 to 25 years of significantly more capable Chinese maritime
military forces;
! new technologies that may affect U.S. Navy ship capabilities;
! additional forward homeporting and the Sea Swap concept;
! DOD’s increased emphasis on achieving full jointness in U.S.
military plans and operations; and
! potential tradeoffs between funding Navy requirements and funding
competing defense requirements.
Sea-based Missile Defense. The Navy would likely play a role in any
future U.S. missile defense system, but the nature of that role is not yet well defined,
because the Missile Defense Agency (MDA) is only in the early stages of defining
its preferred eventual overall missile-defense architecture.
Navy ships could contribute to a U.S. missile defense system by acting as
platforms for both radars and interceptor missiles. Sea-based radars could be placed
on surface combatants or on non-combatant platforms such as auxiliary ships or
floating structures resembling offshore oil platforms. Several U.S. Navy surface
combatants have recently been designated to operate on a rotational basis in the Sea
of Japan as forward radar platforms for detecting potential ballistic missile launches
from North Korea. Sea-based interceptor missiles could be based on either
submarines, surface combatants, or noncombatant platforms. Submarines might be
particularly suitable as boost-phase interceptor platforms, while noncombatant
platforms might be particularly suitable as midcourse radar or interceptor platforms.
Surface combatants might be suitable as either.
Eventual decisions on the overall missile defense architecture consequently
could affect Navy requirements for submarines, surface combatants, and auxiliary
ships. A new Navy force structure plan that errs badly in anticipating the Navy’s
eventual role in the overall missile defense architecture could leave the country with
a surplus or shortfall of ships in one or more of these categories. A shortfall could
create a tension between performing sea-based missile defense and performing other
Navy missions, while a surplus would suggest that the funds used to build some ships
might have been better used for other purposes. If MDA can take steps to better
define the Navy’s role in the overall missile-defense architecture, this could reduce
the potential for the next Navy force structure plan to result in such a surplus or
shortfall.
Sea Basing Concept. Implementing the sea basing concept would affect
requirements for numbers and types of amphibious ships and MPF(F) ships. It might
also affect requirements for surface combatants such as the DD(X) and the LCS.
Exactly how implementing sea basing would affect these requirements, however, is
not yet clear because the number of sea basing squadrons, and their composition, is
still being examined.
Global War on Terrorism and Irregular Warfare. The potential effects
of the global war on terrorism and irregular conflicts such as insurgencies on

CRS-20
requirements for U.S. ground forces have received much attention in recent months.
The potential effects of these factors on requirements for U.S. naval forces, in
contrast, has received less attention. Possible effects on requirements for U.S. naval
forces include an increased emphasis on one or more of the following:
! ships (such as attack submarines, surface combatants, or aircraft
carriers) that can conduct offshore surveillance of suspected
terrorists and irregular military forces using either built-in sensors or
embarked unmanned vehicles;
! ships (such as surface combatants, and perhaps particularly smaller
and less heavily armed combatants like the LCS) for conducting
coastal patrol and intercept operations, including countering small
boats and craft and countering pirate-like operations;35
! ships (such as attack submarines) for covertly inserting and
recovering Navy special operations forces, known as SEALs;36
! ships (such as amphibious ships) for supporting smaller-scale
Marine Corps operations ashore; and
! ships (such as aircraft carriers or large-deck amphibious assault
ships) that can launch strike-fighters armed with smaller-scale
precision guided weapons.
Chinese Maritime Military Forces. Some analysts are concerned that DOD
in coming years may structure U.S. forces, including the Navy, too closely around
near-term requirements associated with the global war on terrorism, irregular
conflicts, and conflicts against countries like Iraq and Afghanistan, and not enough
around requirements associated with countering significantly more capable Chinese
military forces, including maritime forces, that might emerge over the next 10 to 25
years.
Views among analysts differ concerning the possible scale or composition of
China’s military modernization efforts. Most, however, appear to agree that a
growing Chinese economy would be able to finance a significant military
modernization effort, should Chinese leaders decide to embark upon one, and that
improved naval forces capable of operating in blue waters (i.e., waters further away
from China’s coast) could be a significant component of such an effort.37
Structuring the U.S. Navy primarily to match the near-term requirements
mentioned above could lead to a fleet that is strongly oriented toward operating in
35 Coast Guard cutters may also be well suited for such operations.
36 SEAL stands for SEa, Air, and Land.
37 For more on China’s current and potential future military capabilities, and Chinese
strategic thinking, see U.S. Department of Defense, Annual Report on The Military Power
of The People’s Republic of China
, Washington, 2004. (FY2004 Report To Congress on
PRC Military Power, Pursuant to the FY2000 National Defense Authorization Act) 54 pp.

CRS-21
near-shore areas, attacking land targets, and countering land-based military forces.
Preserving an ability to counter significantly more capable Chinese maritime military
forces in the future could involve preserving different kinds of capabilities (or the
foundations in technology and operational experience for building up such
capabilities), particularly open-ocean antisubmarine warfare, air-to-air combat,
defense against large-scale antiship cruise missile attacks, defense against
sophisticated electronic warfare techniques and cyberwar attacks, and capabilities for
attacking larger enemy ships at sea.
New Technologies. New technologies that will likely affect the capabilities
of Navy ships in coming years, and consequently the number of ships that may be
needed to perform a given set of missions, include improved radars and other sensors
(including miniaturized sensors), improved computers and networking systems,
unmanned vehicles, reduced-size, precision-guided, air-delivered weapons, rail guns,
directed-energy weapons, and integrated electric drive propulsion technology, to
name just a few. Although the effect of improving technology historically has often
been to increase the capability of individual Navy ships and thereby permit a
reduction in the number of Navy ships needed to perform a stated set of missions,
some analysts believe that networking technology and reduced-sized sensors may
argue in favor of a more distributed force structure that includes a larger number of
smaller ships such as the LCS.
Forward Homeporting and Sea Swap. Other things held equal,
homeporting additional Navy ships in forward locations such as Guam and Hawaii,
and applying the Sea Swap concept to a significant portion of the fleet, could reduce,
perhaps substantially, the total number of Navy ships needed to maintain a certain
number of Navy ships in overseas operating areas on a day-to-day basis.
Navy officials, for example, have stated that in terms of resulting operating days
in the Pacific, a Guam-homeported attack submarine is the equivalent of an average
of about 2.3 attack submarines homeported in the Third Fleet (i.e., in San Diego or
Pearl Harbor).38 The Congressional Budget Office, in a March 2002 report on the
attack submarine force, stated that the ratio might be higher, with a
Guam-homeported attack submarine equivalent in operating days to about three
38 In a “memorandum for interested members of Congress” on the homeporting of attack
submarines in Guam dated January 22, 2001, the Navy stated: “Three attack submarines
homeported in Guam will provide a total of 300 days (on average) of operations and
engagement per year. Those submarines would provide 130 days of operations and
engagement per year if they were homeported in [the] Third Fleet [i.e., Eastern Atlantic] and
deployed to [the] Seventh Fleet [i.e., Western Pacific] in accordance with current
guidelines,” 300 divided by 130 is about 2.3. The text of the memo was reprinted in the
February 12, 2001 issue of Inside the Navy under the headline, “Text: Navy Memo on Subs
in Guam,” For the accompanying news story, see Christian Bohmfalk, “Basing Attack Subs
On Guam Expected To Increase Fleet’s Presence,” Inside the Navy, Feb. 12, 2001. For
additional discussion, see CRS Report RL32418, Navy Attack Submarine Force-Level Goal
and Procurement Rate: Background and Issues for Congress
, by Ronald O’Rourke. pp. 30-
33.

CRS-22
attack submarines homeported elsewhere.39 Recent experiments with the Sea Swap
concept on surface combatants sent on long deployments to the Indian Ocean/Persian
Gulf region suggest that the concept, if widely applied, might reduce the total number
of surface combatants needed to maintain a certain number in forward-deployed
locations by 20% or more.40 The Navy reportedly is considering increasing the
number of attack submarines homeported at Guam and transferring one of its
continental-U.S.-homeported aircraft carriers to either Hawaii or Guam.
A key planning consideration is the potential difference between the number of
Navy ships required for maintaining day-to-day forward deployments and the number
required for fighting conflicts. Forward homeporting and Sea Swap affect primarily
the former rather than the latter. As a consequence, for some types of ships,
additional forward homeporting and use of Sea Swap might reduce the number
needed for maintaining day-to-day forward deployments below the number needed
for fighting conflicts. In such cases, fully implementing the force-level economies
suggested by forward homeporting and Sea Swap could leave the Navy with
inadequate forces for fighting conflicts.
Jointness. DOD’s increased emphasis on achieving increased jointness (i.e.,
coordination and integration of the military services) in U.S. military plans and
operations could lead to reassessments of requirements for Navy capabilities that
were originally determined in a less-joint setting. Areas where U.S. Navy capabilities
overlap with the those of the Air Force or Army, and where total U.S. capabilities
across the services exceed DOD requirements, might be viewed as candidates for
such reassessments, while capabilities that are unique to the Navy might be viewed
as less suitable for such reassessments. An example of a broad area shared by the
Navy, Air Force, and Army is tactical aviation, while an example of an area that is
usually regarded as unique to the Navy is antisubmarine warfare.
Competing Defense Priorities. A final issue to consider are the funding
needs of other defense programs. In a situation of finite defense resources, funding
certain Navy requirements may require not funding certain other defense priorities.
If so, then the issue could become how to allocate finite resources so as to limit
operational risk over the various missions involving both Navy and non-Navy
mission requirements.
Potential Oversight Questions. Potential oversight questions for Congress
regarding the planned size of the Navy and its relationship to ship procurement plans
and budgets include the following:
! Desired Navy capabilities. Have DOD and the Navy defined the
set of capabilities the Navy should have? If not, when do DOD and
the Navy anticipate completing this task? Should Congress establish
a deadline for completing it? If DOD and the Navy have completed
39 U.S. Congressional Budget Office, Increasing the Mission Capability of the Attack
Submarine Force
, March 2002, p. 11.
40 For additional discussion, see CRS Report RS21338, Navy Ship Deployments: New
Approaches — Background and Issues for Congress
, by Ronald O’Rourke. pp. 4-5.

CRS-23
the task, have they defined this set of capabilities accurately, taking
into account factors like those discussed in the previous section?
! Translating desired capabilities into planned force structure.
Have DOD and the Navy translated desired Navy capabilities into
new Navy force-structure goals? If not, when do DOD and the Navy
anticipate completing this task? Should Congress establish a
deadline for DOD and the Navy to complete this task and issue a
new Navy force structure plan? To the extent that DOD and the
Navy have translated desired Navy capabilities into Navy force
structure goals, have they done so accurately, taking into account
factors like those discussed in the previous section?
! Procurement plan. If DOD and the Navy have accurately
translated desired capabilities into force-structure goals, would
implementing the associated Navy procurement plan achieve a fleet
with such a force structure in a timely manner?
! Budget plan. If the procurement plan would achieve the desired
force structure in a timely manner, have DOD and the Navy
programmed the correct amount of funding to implement this
procurement plan? If the Navy’s procurement plan is fully funded,
what other defense priorities might not be fully funded, and what
are the resulting potential operational risks?
Number of Yards Involved in Navy Shipbuilding
How many shipyards should be regularly involved in Navy shipbuilding?
Questions about the Navy shipbuilding industrial base, including the number of
yards that should be regularly involved in Navy shipbuilding, have been debated in
Congress for many years, and particularly since the early 1990s, when the rate of
Navy ship procurement dropped to a relatively low level as a consequence of the end
of the Cold War and the dissolution of the Soviet Union. This section reviews the
question of the number of yards that might be regularly involved in Navy
shipbuilding in light of the possibility that the next Navy force structure plan might
call for a fleet of roughly 250 to 330 ships, including 30 to 45 LCSs, as shown in
Table 1.
Candidate Yards. Candidate shipyards for building Navy ships in coming
years include the six yards that have built the Navy’s major warships in recent years
and three additional yards that are competing to build LCSs. The six yards that have
built the Navy’s major warships in recent years are:
! General Dynamics(GD)/Bath Iron Works (BIW) of Bath, ME;
! GD/Electric Boat (EB) of Groton, CT, and Quonset Point, RI;
! GD/National Steel and Shipbuilding Company (NASSCO) of San
Diego, CA;

CRS-24
! Northrop Grumman (NOC)/Avondale Shipyards, located near New
Orleans, LA;
! NOC/Ingalls Shipbuilding of Pascagoula, MS;41 and
! NOC/Newport News Shipbuilding (NGNN) or Newport News, VA.
The three yards competing to build LCSs are:
! Austal USA of Mobile, AL, which is the production shipyard on the
LCS industry team led by General Dynamics;42
! Bollinger Shipyards of Louisiana and Texas, which is one of two
production shipyards on the LCS industry team led by Lockheed
Martin;43 and
! Marinette Marine of Marinette, WI, which is the other production
shipyard on the Lockheed-led LCS industry team.
Factors to Consider. In assessing how many shipyards should be regularly
involved in Navy shipbuilding in coming years, Congress may consider a number of
factors, including factors relating to shipyard capacity, factors relating to cost and
acquisition strategy, and factors relating to other issues.
Capacity-Related Factors.
Yard Capacities. Table 3 on the next page, taken from a 1996 CRS report,44
shows the maximum annual production capacities of the first group of six yards,
measured in the principal kinds of ships that they were building for the Navy in 1996,
which are broadly similar to the kinds of ships they are building for the Navy today.
As can be seen in the table, most of the yards in 1996 could build 3 to 5 ships per
year of the kinds they were producing at that time, while Ingalls could build more.45
The maximum capacities of the yards today would be roughly similar, and in some
41 The Avondale and Ingalls yards, together with a fabrication facility at Gulfport, MS, form
Northrop Grumman Ship Systems (NGSS) division.
42 Austal USA was created in 1999 as a joint venture between Austal Limited of Henderson,
Western Australia and Bender Shipbuilding & Repair Company of Mobile, AL. The
Lockheed LCS team also includes GD/BIW as prime contractor, to provide program
management and planning, to provide technical management, and to serve as “LCS system
production lead,”
43 Bollinger operates about 15 shipyards and ship-related facilities in Louisiana and Texas,
of which three, located in Lockport, LA, Gretna, LA, and Amelia, LA, are for building new
ships.
44 CRS Report 96-785 F, Navy Major Shipbuilding Programs and Shipbuilders: Issues and
Options for Congress
, by Ronald O’Rourke. (1996, archived; available from the author at
202-707-7610.) Table 2 on page 28; see also text on page 27.
45 As noted in the 1996 CRS report, caution should be exercised in using the figures in this
table to judge the comparative capacities of the yards, because these figures do not adjust
for the differing sizes and levels of complexity of the various types of ships listed. A
shipyard that is listed as being able to build a given number of large, complex ships may
have more capacity than a yard that is listed as being able to build a larger number of smaller
or less complex ships.

CRS-25
cases perhaps a bit higher due to yard modernization efforts since 1996 that have
increased throughput capacities.
Table 3. Annual Shipyard Production Capacities
Yard
Maximum capacity: Number of ships completed per year
GD/BIW
3.5 Arleigh Burke (DDG-51) class destroyers
GD/EB
3 nuclear-powered attack submarines (SSNs)a
GD/NASSCO
4 or 5 Supply (AOE-6) class underway replenishment ships or 5 or
6 Watson (TAKR-310) class sealift shipsb
NOC/Avondale
4 Harpers Ferry (LSD-49) class amphibious ships
NOC/Ingalls
11 DDG-51 class destroyers
or
8 DDG-51 class destroyers + 1 Wasp (LHD-1) class amphibious
ship
NOC/NGNN
4 SSNsc + 1 nuclear-powered aircraft carrier (CVN)
Source: CRS Report 96-785 F, Navy Major Shipbuilding Programs and Shipbuilders: Issues and
Options for Congress
, op cit. Table 2 on page 28.
a Capacity of EB’s Land-Level Submarine Construction Facility (LLSCF). Additional submarines
could be built in EB’s older inclined building ways.
b These ships are also known as Large, Medium-Speed Ro/Ro (Roll-on/Roll-off) ships (LMSRs).
c Capacity of NGNN’s Modular Outfitting Facility (MOF). Additional submarines could be built in
NGNN’s graving docks.
The annual rates in this table add up to roughly 30 ships per year. Adding in the
capacities of one or more of the three yards now competing to build LCSs would
increase this figure. As noted in the 1996 CRS report, achieving and sustaining the
rates shown in Table 3 could require at least some of the yards to curtail or eliminate
other forms of work, such as overhaul and repair of Navy and commercial ships and
construction of commercial ships. It could also result in levels of employment at the
yards that could strain the managerial and supervisory capacities of the yards.46
Potential Shipbuilding Rate for Fleet of 250 to 330 Ships. If the next Navy
force structure plan calls for a fleet of about 250 to about 330 ships, including 30 to
45 LCSs, then as shown in Table 4 on the next page, the steady-state procurement
rate for Navy ships — the average annual procurement rate that, if maintained over
the long run, would support a fleet of that size over the long run — could be roughly
7 to 10 ships per year, including LCSs, and roughly 6 to 8 ships per year other than
LCSs.47
46 These maximum rates also do not take into account possible capacity limitations in critical
supporting supplier industries that could prevent these high rates from being achieved.
Limits on supporting supplier industries, however, may be independent of the number of
shipyards involved in the building effort. If supplier industries, for example, could only
support a combined production rate of 10 ships per year, that limit might apply regardless
of whether those 10 ships were being built by 6 yards or some other number of yards.
47 The steady state replacement rate for an item is equal to the force-level goal divided by
(continued...)

CRS-26
Table 4. Steady-State Ship Procurement Rate for Fleet of 250 to
330 Ships
(average annual procurement rates)
Expec-
Notional fleets
ted
service

~250 ships
~330 ships
Ship type
life
(years)

Number
Steady-state Number
Steady-state
rate
rate
SSBNs
42
14
0.33
14
0.33
SSGNs
42
4
0.10
4
0.10
SSNs
33
37
1.12
50
1.52
Aircraft carriers
50
11
0.22
12
0.24
Crus/Des/Friga
35
70
2.0
84
2.4
LCSs
25
30
1.2
45
1.8
Amphibious
35
24
0.69
36
1.03
MPF(F)s
35
10
0.29
16
0.46
CLFb
35
30
0.86
34
0.97
Cmd/supportc
35
20
0.57
25
0.71
Dedicated MIWd
25
0
0
8
0.32
TOTAL
250
7.37
328
9.88
TOTAL other than
220
6.17
283
8.08
LCSs
Source: Prepared by CRS based on U.S. Navy data for ship expected service lives.
a Cruisers, destroyers, and frigates.
b Combat Logistics Force ships (i.e., ships that resupply Navy combat ships).
c Command and support ships.
d Dedicated mine warfare ships.
The planned ship service lives shown in this table are based on Navy planning
data. If actual ship service lives turn out to be shorter than shown in the table, as
some observers believe they might be based on historical evidence with previous
classes of Navy ships, then the steady-state replacement rate figures would be higher
than those shown in the table.
47 (...continued)
the service life. For example, a force-level goal of 70 cruisers, destroyer, and frigates
divided by a service life of 35 years for such ships equals a steady state procurement rate of
2 such ships per year.

CRS-27
To compensate for the relatively low rate of Navy ship procurement since the
early 1990s, maintaining a fleet of about 250 to 330 ships, including 30 to 45 LCSs,
will require an average procurement rate in coming years somewhat higher than the
steady-state rate. Assuming an average 35-year life for Navy ships, the required rate
might be about 8 to 12 ships per year including LCSs, and about 7 to 10 ships per
year other than LCSs.48 If average ship life is assumed to be closer to 30 years, which
some observers believe is a more realistic figure, then the required shipbuilding rate
might be closer to about 10 to 15 ships per year including LCSs, and about 9 to 12
ships per year other than LCSs.49
Even if the production capacities shown in Table 3 are reduced significantly to
avoid a risk of straining the yards’ managerial and supervisory abilities and to allow
for the yards to do things other than build new Navy ships, it would appear that the
nine candidate yards collectively have more than enough capacity to build the ships
associated with maintaining a fleet of about 250 to 330 ships, including 30 to 45
LCSs. If, for example, each yard involved in Navy shipbuilding builds an average
of two Navy ships per year, then of the total of nine candidate yards, four to six might
be sufficient to build 8 to 12 ships per year, including LCSs, while of the first group
of six yards, four or five might be sufficient to build a total of 7 to 10 ships per year
other than LCSs. An average rate of two ships per year for each yard is between one-
third and two-thirds of most of the maximum annual rates shown in Table 3, and is
similar to rates executed at times in the 1980s, during the final years of the Cold War.
Potential Need to Surge to Higher-Rate Production. Advocates of keeping
a larger number of shipyards involved in Navy shipbuilding could argue that in light
of the difficulties of predicting future potential threats to U.S. interests, and the
possibility that China may choose to build a significant maritime military capability
over the next 10 to 25 years, it is possible that the Navy and DOD might decide years
from now that the United States needs to build a Navy substantially larger than one
of about 250 to 330 ships, in which case there may be a sudden need for building
substantially more than 8 to 12 ships per year. Keeping a larger number of yards
involved in Navy shipbuilding, they could argue, would make it easier to shift to
higher-rate production in a timely manner without straining yard capabilities.
Advocates of keeping a smaller number of yards involved in Navy shipbuilding
could argue that in light of the capacity figures shown in Table 3, even a smaller
48 The decline in the rate of Navy ship procurement to relatively low levels began about
FY1993. During the 12-year period FY1993-FY2004, a total of 64 battle force ships (none
of them LCSs) were procured, or an average of about 5.3 ships per year. Subtracting these
64 ships from a total fleet of 250 to 330 ships would leave a total of 186 to 266 ships
(including all 30 to 45 LCSs) to be procured during the remaining 23 years of a 35-year
procurement period for replacing the entire fleet. Procuring these 186 to 266 ships over a
23-year period would require an average procurement rate of about 8.1 to 11.6 ships per
year. A total of 156 to 221 ships other than LCSs would need to be procured over these 23
years, or an average of 6.8 to 9.6 ships per year.
49 Extending the analysis in the previous footnote, a total of 186 to 266 ships of all kinds
divided by the 18 remaining years in a 30-year procurement period equates to an average
rate of about 10.3 to 14.8 ships per year, while a total of 156 to 221 ships other than LCSs
divided by 18 years equates to an average rate of about 8.7 to 12.3 ships per year.

CRS-28
number of yards could still have enough excess capacity to shift to a higher rate of
production in a timely manner without straining yard capabilities.
Potential For Creating New Yards or Reopening Closed Yards.
Depending on other forms of work available to various shipyards (see discussion
below), a decision to keep a smaller number of yards involved in Navy shipbuilding
could lead to the end of shipbuilding activities at, or the complete closure of, yards
that are not involved in Navy shipbuilding. As a result of this possibility, a potential
additional factor to consider is the potential for creating new shipyards or reopening
closed ones to respond a need at some point in the future for additional shipbuilding
capacity. Factors to consider in assessing this potential include availability of
suitable waterfront property, regulatory issues, cost and time for facilities, and cost
and time for the workforce:
! Waterfront property. If a shipyard is closed but the property is not
sold off and developed for other uses (such as conversion into
waterside residential units), then it might remain available for
eventual reuse as a shipyard. Part of the former government-
operated U.S. naval shipyard in Philadelphia, for example, has been
converted by the Kvaerner Corporation into a new facility for
building commercial ships. If, however, a closed yard’s waterfront
property is sold off and developed for other uses, it may be difficult
to find other suitable waterfront property to establish a new yard, at
least in the same immediate area.
! Regulatory issues. Since shipyards are major industrial facilities,
gaining regulatory approval for establishing a shipyard on a parcel
of waterfront property may involve a number of regulatory issues.
A special set of regulatory issues would apply in the case of a
proposal to establish or reopen a shipyard capable of building
nuclear-powered ships. Although the Navy maintains extremely
high safety standards in its program for building, operating, and
maintaining its nuclear-powered ships, the challenges involved
gaining regulatory approval (and local popular support) for
establishing a shipyard that would work with radioactive fuel as part
of the process for building nuclear-powered ships are viewed as
potentially significant, particularly if the area in which the shipyard
is to be located has not hosted such a facility previously or for some
number of years. The potential challenges associated with creating
a new nuclear-capable shipyard, or reopening and recertifying a
closed one, are a reason why some observers have argued that
particular caution should be applied when considering actions that
may have the effect of leading to the closure of either of General
Dynamics/Electric Boat or Northrop Grumman/Newport News,
which are the only two yards that have built nuclear-powered ships
in recent years.50
50 In theory, nuclear-powered warships could be built at one or more of the country’s four
(continued...)

CRS-29
! Cost and time for facilities. Building the facilities for a new
shipyard capable of building larger ships for the Navy could easily
involve an investment of several hundred million dollars, or possibly
more than a billion dollars, and a number of years of construction
time. Reopening a closed shipyard could cost less and require less
time, if some portion of the yard’s old facilities were left in place
and preserved.
! Cost and time for workforce. Hiring and training the workforce of
a yard capable of building large and complex Navy ships, and
putting together a team of capable managers and supervisors for
such a facility, could take considerable time and resources if skilled
production workers and experienced managers and supervisors were
not readily available from other yards. Some observers believe that
establishing a skilled workforce can be the most time-consuming
component of an effort to create or reopen a shipyard.
Factors Related to Cost and Acquisition Strategy.
Shipyard Fixed Overhead Costs. Other things held equal, keeping a higher
number of yards involved in building Navy ships could increase the total cost of
Navy ships by increasing the amount of shipyard fixed overhead costs included in
that cost.51 A 1996 CRS report estimated that a smaller shipyard capable of building
major Navy ships (i.e., one whose facilities are adjusted to support a total
employment of a few thousand people) might have fixed costs ranging from a few to
several tens of millions of dollars per year, while a larger shipyard capable of
building major Navy ships (i.e., one whose facilities are adjusted to support a total
employment ranging from several thousand people to more than 10,000 people)
might have fixed costs ranging from several tens of millions of dollars per year to
50 (...continued)
government-operated naval shipyards, which are located at Portsmouth, NH/Kittery, ME,
Norfolk, VA, Bremerton, WA, and Pearl Harbor, HI. Government-operated naval shipyards,
however, have not built new ships for the Navy since the 1970s (they have been used since
that time only to overhaul, repair, and modernize Navy ships), so considerable investment
would be needed to improve their facilities so as to support new-construction work.
51 As explained in a 1996 CRS report , a manufacturing facility’s fixed overhead costs are
those that are relatively insensitive (i.e., do not change very much in response) to changes
in the level of production, particularly over the shorter run. Some fixed costs would
continue to be incurred even if the level of production at the facility falls to zero. A
manufacturing facility’s other main type of costs are its variable costs, which are those
incurred in proportion to the level of production. Variable costs include expenses for labor
and materials. A firm’s fixed costs are spread over — that is, charged to and thereby
incorporated into the cost of — the various work projects that make up the total workload
underway at the facility. (CRS Report 96-785 F, Navy Major Shipbuilding Programs and
Shipbuilders: Issues and Options for Congress
, by Ronald O’Rourke. 1996, archived;
available from the author. Pages 83-84.)

CRS-30
more than $100 million per year.52 Given inflation since 1996, those figures might
be somewhat higher today.
On this basis, keeping a higher rather than lower number of yards involved in
building Navy ships might increase the fixed overhead costs associated with building
these ships by perhaps a few hundred million, or possibly several hundred million,
dollars a year. Given current and projected procurement costs for Navy ships,
building a total of 8 to 12 ships per year including LCSs could cost an average of
more (perhaps much more) than $10 billion per year, in which case a figure of a few
or possibly several hundred million dollars in additional fixed overhead costs would
increase the collective cost of those ships by a few or possibly several percent. The
decision to produce Virginia-class submarines jointly between two yards rather than
at a single yard, for example, may have increased the cost of these submarines by
somewhere between about $70 million and about $200 million per boat, which
equates to about 3% to 9% of the cost of each boat. Some (but not all) of this
additional cost is due to the additional fixed overhead costs of maintaining the
combined equivalent of more than one complete submarine production line between
the two yards.53
Advocates of keeping a smaller number of yards involved in Navy shipbuilding
could argue that a sum of a few or possibly several hundred million dollars per year
in additional shipyard fixed overhead costs is significant in an absolute sense and that
being good stewards of taxpayer dollars requires reducing Navy ship construction
costs wherever possible, including the area of shipyard fixed overhead costs.
Advocates of keeping a larger number of yards involved in Navy shipbuilding could
argue that, as a percentage of the total cost of the ships being built, this sum is not
very significant and is worth the benefits of keeping more yards involved.
Cost Associated With Split Learning Curves. Other things held equal, if
keeping a higher number of shipyards involved in Navy shipbuilding results in
producing a given class of ship at two yards rather than at one yard, the resulting
“splitting of the learning curve” between the two yards might increase the cost of
producing that class of ship by roughly 1% to 4%.54 Navy officials, for example,
52 CRS Report 96-785 F, Navy Major Shipbuilding Programs and Shipbuilders: Issues and
Options for Congress
, op cit., p. 84.
53 For a discussion, see CRS Report RL32418, Navy Attack Submarine Force-Level Goal
and Procurement Rate: Background and Issues for Congress
, by Ronald O’Rourke, pp. 48-
50.
54 The concept of the production learning curve refers to the reduction in labor hours needed
to produce each item in a series as the workers at the facility learn (i.e., become more
familiar with and experienced in building) the design. If an item is produced at two
facilities rather than one, the workforce at each facility must travel down the learning curve,
increasing average labor costs for the combined lot of items being built at both facilities.
Given typical learning curves (i.e., rates of learning) for Navy ships and potential production
runs ranging from a few ships to perhaps about 20 ships, splitting a learning curve for a class
of Navy ships can increase shipyard labor costs for building the class by perhaps 3% to 13%.
If shipyard labor costs account for roughly 20% to 40% of the total construction cost of a
(continued...)

CRS-31
estimated that the 2002 agreement between the Navy, Northrop Grumman, and
General Dynamics to consolidate production of the 12 planned LPD-17 amphibious
ships at Northrop’s Avondale and Ingalls shipyards rather than divide the class on
two-for-one basis between the Northrop yards and GD/BIW, respectively, would
reduce construction costs for the program by at least $437 million dollars.55 This
would equate to a savings of roughly 3% for a class of 12 LPD-17s costing an
average of $1.2 billion each. Much of this savings was due to avoiding a split
learning curve for the class. Keeping a higher number of yards involved in Navy
shipbuilding, however, might not necessarily result in any instances of splitting the
learning curve, in which case there would be no additional cost due to this factor.
As with the issue of shipyard fixed overhead costs, advocates of keeping a
smaller number of yards involved in Navy shipbuilding could argue that the potential
additional costs resulting from split learning curves are significant in an absolute
sense, while advocates of keeping a larger number of yards involved in Navy
shipbuilding could argue that even if this results in additional instances of split
learning curves, the resulting additional costs would not be very significant as a
percentage of the total cost of the ships being built and are worth the benefits of
keeping more yards involved.
Cost of Government Supervision. Other things held equal, keeping a higher
number of shipyards involved in Navy shipbuilding may result in higher costs to the
Navy for supervising the work done at those yards. Additional personnel-related
costs for supervising a larger number of sites might total millions of dollars a year.
Competition in Ship Design. Advocates of keeping a larger number of yards
involved in Navy shipbuilding could argue that doing so would increase the
likelihood of having two yards with recent experience in designing a given kind of
ship, thus improving the government’s ability to use competition in the design stage
of ship acquisition programs to spur design innovation and achieve the best possible
design. Recent experience in building a given category of ship, they could argue,
could be particularly important in strengthening a yard’s understanding of design
producibility (i.e., designing a ship so that it can not only perform its missions well,
but also be produced in the shipyard easily and at lower cost).
Advocates of keeping a smaller number of yards involved in Navy shipbuilding
could argue that doing so could involve having individual yards building multiple
types of ships, in which case the Navy might be no less likely to have at least two
yards with recent experience in designing and building a given type of ship. Yards
involved in building multiple types of ships, they could argue, might be better able
54 (...continued)
Navy ship, then this would equate to an increase in the total construction cost of the ship of
0.6% to 4.2%. For a discussion, see CRS Report 96-785 F, Navy Major Shipbuilding
Programs and Shipbuilders: Issues and Options for Congress
, op cit, pp. 95-101.
55 Kerry Gildea, “Navy Evaluating Option For Building Added LPD-17 Earlier Than
Planned,” Defense Daily, April 4, 2003. The Navy earlier estimated that the savings would
be at least $400 million. See David Rogers, “Pentagon’s Revised Budget Nears Agreement
In House And Senate,” Wall Street Journal, October 9, 2002.

CRS-32
to transfer design innovations from one type of ship to another and take maximum
advantage of the potential for exploiting commonality in systems and components
across ship types so as to reduce cost.
Competition in (or Benchmarking of) Ship Construction. Competition in
the awarding of contracts for building follow-on ships in Navy shipbuilding programs
(i.e. the ships that follow the lead ship in each class) was a common feature in Navy
shipbuilding programs in the 1980s but became less common in the 1990s and is rare
today, primarily because of the decrease in Navy shipbuilding rates since the end of
the Cold War. Some policymakers believe that competition in the awarding of
contracts for building follow-on ships can be advantageous for the government in
terms of constraining production costs, maintaining adherence to delivery schedules,
and maintaining high production quality standards. Results in constraining costs can
offset the additional costs (such as additional shipyard fixed overhead costs) of
keeping a larger number of yards involved in building Navy ships.
Advocates of keeping a larger number of yards involved in Navy shipbuilding
could argue that doing so increases the chances of having two yards with recent
experience in building various kinds of Navy ships, thus preserving a potential for
resuming effective competition in the awarding of contracts for building these ships,
should shipbuilding rates in the future increase to levels that can support a
resumption of competition. Even if procurement rates do not increase enough to
support a resumption of competition, they could argue, keeping at least two yards
involved in building a given kind of ship permits the government to use one yard’s
performance in that program to benchmark the performance of the other yard
involved in that program. In August 2004, for example, the Navy criticized Newport
News’ performance in its portion of the Virginia-class submarine program, noting
that cost growth on Electric Boat’s portion of the program was much smaller.56
Advocates of keeping a smaller number of yards involved in Navy shipbuilding
could argue that it is unlikely that shipbuilding rates will rise in coming years to
levels that would permit the government to resume meaningful competition in the
awarding of contracts to build follow-on ships, but that having a smaller number of
yards that each build multiple kinds of ships could in any event preserve at least two
yards with recent experience in building various kinds of ships, preserving a potential
for resuming competition or for using one yard’s performance on a program to
benchmark another yard’s performance. In instances where a certain kind of ship is
being built by only one yard, they could argue, the performance of other yards in
building other kinds of ships could still be used to indirectly benchmark the
performance of the first yard using performance measures that are common to
multiple types of Navy shipbuilding efforts.
56 See Christopher J. Castelli, “Virginia-Class Program Delivers Lead Sub, But Cost
Concerns Lom,” Inside the Navy, October 18, 2004; Christopher J. Castelli, “Young
Suggests Changing Work Distribution For Submarine Program,” Inside the Navy, October
4, 2004; Tony Capaccio, “General Dynamics, Northrop Review Of Sub Work Sought,”
Bloomberg.com, September 29, 2004; Bloomberg News. “Northrop’s Submarine Work
Draws Criticism From Navy,” Baltimore Sun, September 16, 2004; Tony Capaccio,
“Northrop Sub Work Has Cost Growth, Delays, Navy Says,” Bloomberg News, September
15, 2004.

CRS-33
Labor Markets. Advocates of keeping a larger number of yards involved in
Navy shipbuilding could argue that this would increase the number of local or
regional labor markets from which shipyard workers could be recruited and trained,
increasing the likelihood that yards could hire and train high-quality workers and
making it potentially easier to rapidly increase the number of workers involved in
Navy shipbuilding, should a sudden increase in required shipbuilding rates call for
such an expansion.
Advocates of keeping a smaller number of yards involved in Navy shipbuilding
could argue that a sufficient number of labor markets would still be involved to
support the hiring and training of new workers, and that attracting new workers when
needed will not be difficult because jobs building Navy ships are relatively well-
paying manufacturing jobs that are highly sought after due to recent declines in the
number of such jobs available in certain other sectors of the economy.
Potential Work Other Than Navy Shipbuilding. Building ships for the Navy
is the primary business for most of the nine candidate yards. Other forms of work,
however, contribute to the workloads and revenues of these yards and can thus
become a consideration in discussions of which yards should be involved in Navy
shipbuilding programs. These other forms of work traditionally have included
repairing and modernizing Navy ships and building and repairing commercial ships.
An additional form of work that has not been available to a significant degree
in past years, but which is currently available, is construction of new Coast Guard
cutters under the Coast Guard’s Deepwater program (a major program for replacing
the Coast Guard’s aging cutters and aircraft). Accelerating the procurement of these
cutters from more distant years into the near term, and expanding the total number
of cutters to be procured under the program, could provide a significant amount of
support over the next several years to the Navy shipbuilding industrial base,
particularly for the shipyards that have been involved in building surface combatants
(Northrop Grumman/Ingalls and General Dynamics/BIW). As discussed in other
CRS reports, accelerating and expanding procurement of cutters under the Deepwater
program could reduce their unit procurement costs by improving production
economies of scale, more quickly reduce operation and maintenance costs associated
with keeping older Coast Guard cutters in service, and more quickly improve the
Coast Guard’s abilities to fully perform all of its post-9/11 missions.57
Factors Relating to Other Issues.
Geographic Base of Support for Navy Shipbuilding. Advocates of keeping
a larger number of yards involved in Navy shipbuilding could argue that doing so
increases the number of locations around the country where Navy ships are built, thus
broadening the geographic base of support for Navy shipbuilding, which can be
important when supporters of Navy shipbuilding compete against supporters of other
57 For a discussion, see CRS Report RL32109, Navy DD(X) and LCS Ship Acquisition
Programs: Oversight Issues and Options for Congress
, by Ronald O’Rourke. pp. 78-81.
See also CRS Report RS21019, Coast Guard Deepwater Program: Background and Issues
for Congress
, by Ronald O’Rourke.

CRS-34
DOD procurement programs, such as aircraft programs, for scarce DOD procurement
dollars.
Supporters of keeping a small number of yards involved in Navy shipbuilding
could argue that doing so could reduce shipbuilding costs and thereby make Navy
shipbuilding more cost-competitive against other areas of DOD procurement for
scarce DOD procurement dollars. They could also argue that the firms that own most
of these yards — General Dynamics and Northrop Grumman — will defend these
programs adequately in the competition for DOD procurement dollars so long as the
Navy ensures that the firms’ rates of return on investment for Navy shipbuilding are
comparable to their rates of return for their other lines of defense work.
Distribution of Economic Benefits of Navy Shipbuilding. Advocates of
keeping a larger number of yards involved in Navy shipbuilding could argue that the
economic benefits of Navy shipbuilding (particularly in terms of providing relatively
well paying manufacturing jobs) should be distributed to as large a number of areas
around the country as possible, since Navy shipbuilding is financed with money
collected from taxpayers around the country. Supporters of keeping a smaller
number of yards involved in Navy shipbuilding could argue that DOD procurement
programs often benefit some areas of the country more than others, and that being
good stewards of the taxpayers’ money means building ships at the lowest possible
cost, even if that means building them in a smaller number of locations.
Potential Oversight Questions. Potential oversight questions for Congress
regarding the number of shipyards that should be regularly involved in Navy
shipbuilding in coming years include the following:
! What are the positions of the Navy, DOD, and the Administration
regarding the number of shipyards that should be regularly involved
in Navy shipbuilding in coming years? What are the Navy’s,
DOD’s, and the Administration’s views regarding the relative
advantages and disadvantages of keeping a larger or smaller number
of yards involved?
! Are the Navy, DOD, and the Administration committed to keeping
all six of the yards that have built the Navy’s major ships in recent
years involved in Navy shipbuilding?
! If so, what steps is the Administration prepared to take to ensure this
result? What are the positions of the Navy, DOD, and the
Administration regarding the possibility of accelerating and
expanding the procurement of larger cutters under the Coast Guard
Deepwater program as a means of providing additional work for the
shipbuilding industrial base over the next several years?
! If the Navy, DOD, and the Administration are not committed to
keeping all six of the yards that have built the Navy’s major ships in
recent years involved in Navy shipbuilding, which yard or yards

CRS-35
does the Administration believe are most likely to not remain
involved in Navy shipbuilding?
! Is the current plan to build LCSs at yards other than six yards that
have built the Navy’s major ships in recent years motivated in part
by a desire by the Navy, DOD, or the Administration to encourage
one or more of the six yards that have built the Navy’s major ships
in recent years to withdraw from Navy shipbuilding?
Legislative Activity in 2004
FY2005 Defense Authorization Bill (H.R 4200/P.L. 108-375)
Section 1014 of the conference report (H.Rept. 108-767 of October 8, 2004) on
H.R. 4200/P.L. 108-375 of October 28, 2004) states:
SEC. 1014. INDEPENDENT STUDY TO ASSESS COST EFFECTIVENESS
OF THE NAVY SHIP CONSTRUCTION PROGRAM.
(a) STUDY. — The Secretary of Defense shall provide for a study of the cost
effectiveness of the ship construction program of the Navy. The study shall be
conducted by a group of industrial experts independent of the Department of
Defense. The study shall examine both —
(1) a variety of approaches by which the Navy ship construction program
could be made more efficient in the near term; and
(2) a variety of approaches by which, with a nationally integrated effort
over the next decade, the United States shipbuilding industry might enhance its
health and viability.
(b) NEAR-TERM IMPROVEMENTS IN EFFICIENCY. — With respect to the
examination under subsection (a)(1) of approaches by which the Navy ship
construction program could be made more efficient in the near term, the
Secretary shall provide for the persons conducting the study to —
(1) determine the potential cost savings on an annual basis, with an estimate
of return on investment, from implementation of each approach examined; and
(2) establish priorities for potential implementation of the approaches
examined.
(c) UNITED STATES SHIPBUILDING INFRASTRUCTURE
MODERNIZATION PLAN. — With respect to the examination under
subsection (a)(2) of approaches by which the United States shipbuilding industry
might enhance its health and viability through a nationally integrated effort over
the next decade, the Secretary shall provide for the persons conducting the study
to —
(1) propose a plan incorporating a variety of approaches that would
modernize the United States shipbuilding infrastructure within the next decade,
resulting in a healthier and more viable shipbuilding industrial base;
(2) establish priorities for potential implementation of the approaches
examined; and
(3) estimate the resources required to implement each of the approaches
examined.

CRS-36
(d) REPORT. — Not later than October 1, 2005, the Secretary of Defense shall
submit a report to the congressional defense committees providing the results of
the study under subsection (a). The report shall include the matters specified in
subsections (b) and (c).
In discussing this provision, the conference report stated:
The House bill contained a provision (sec. 1012) that would require the
Secretary of Defense to have a study conducted by an entity independent of the
Department of Defense on the cost-effectiveness of the ship construction
program of the Navy. The study would examine various approaches for how the
Navy ship construction program could be made more cost-effective in the
near-term, and how the United States shipbuilding industry might be made
globally competitive through a nationally integrated effort over the next decade.
The Senate amendment contained no similar provision.
The Senate recedes with an amendment that would require the Secretary of
Defense to provide for a group of industrial experts to assess priorities for
potential implementation of the various approaches in the near-term study, with
an assessment of the return on investment. It would also require an assessment
of priorities for potential implementation of the various approaches for the
nationally, integrated effort, with the objective being to create a healthier and
more viable U.S. shipbuilding industrial base.
The conferees believe the group chosen for this study should be five to ten
industrial experts who represent an array of industrial sectors, not just the
shipbuilding industry. Many sectors of the U.S. industrial base have had to retool
processes and equipment to become more competitive. Since the rate of
shipbuilding is much lower, competitiveness has not provided the same incentive
for this sector. The conferees are aware of and support the work of the National
Shipbuilding Research Program-Advanced Shipbuilding Enterprise (NSRP —
ASE), including its lean shipbuilding initiative. The conferees would expect the
group of industrial experts chosen for this study to become familiar with this
work, and to consider the potential for using the NSRP — ASE to implement
some of the various approaches. (Pages 755-756)
In its discussion of a proposed ballistic missile defense interceptor called the
kinetic energy interceptor (KEI), which could be both ground- and sea-based, the
conference report stated:
The conferees remain convinced that the KEI could be an important aspect
of the overall ballistic missile defense architecture, potentially contributing
intercept capabilities in boost, midcourse, and terminal phases of the threat
missile flight. The conferees are concerned, however, with the lack of progress
in defining basing modes. The conferees note that:
(1) Recent justifications for the KEI ground-based variant suggest that it
might serve as the basis for midcourse intercept capability in Europe. At the
same time, however, the budget request included $35.0 million for additional
ground-based interceptors (GBI) for the ground-based midcourse defense
element that could be deployed in Europe; and

CRS-37
(2) Consideration of sea-based concepts of operations and platforms do not
appear to be progressing.
The conferees direct the Director of the Missile Defense Agency to provide
a report to the congressional defense committees by February 1, 2005 that
includes planned ground- and sea-basing modes for KEI (including specific
sea-based platforms) and the concept of operations for each basing mode; how
KEI will enhance ballistic missile defense system capabilities; the role KEI may
play in European missile defense and how that role relates to the fielding of
additional GBIs ground-based interceptors); and a comparison of anticipated
sea-based KEI capabilities with other sea-based missile defense options. (Pages
579-580