Order Code RS21059
Updated April 7, 2005
CRS Report for Congress
Received through the CRS Web
Navy DD(X) and CG(X) Programs: Background
and Issues for Congress
Ronald O’Rourke
Specialist in National Defense
Foreign Affairs, Defense, and Trade Division
Summary
The FY2006-FY2011 Future Years Defense Plan (FYDP) reduces planned DD(X)
destroyer procurement to one ship per year in FY2007-FY2011 and accelerates
procurement of the first CG(X) cruiser to FY2011. The Navy estimates that the first and
second DD(X)s would cost more than $3 billion each to procure, including detailed
design and nonrecurring engineering costs, and that subsequent DD(X)s would cost $2.2
billion to $2.6 billion each to procure. These estimates are substantially higher than last
year’s figures. The FY2006 budget requests $666 million in advanced procurement
funding for the first DD(X), which is planned for procurement in FY2007, $50 million
in advance procurement funding for the second DD(X) planned, which is planned for
procurement in FY2008, and $1,115 million for DD(X)/CG(X) research and
development. The Navy is considering holding a one-time, winner-take-all competition
between Northrop Grumman’s Ship System Division (NGSS) and General Dynamics’
Bath Iron Works (GD/BIW) for the right to build all DD(X)s. Several Members of
Congress have expressed opposition to this idea. The Emergency Supplemental
Appropriations Act for 2005 (H.R. 1268) as reported in the Senate contains a provision
(Sec. 1119) that effectively prohibits the Navy from using a winner-take all strategy for
the DD(X) program. The DD(X) and CG(X) programs pose several potential issues for
Congress. For a longer discussion of the DD(X) and CG(X) programs, see CRS Report
RL32109.1 This report will be updated as events warrant.
Background
The DD(X) destroyer and CG(X) cruiser programs were announced by the Navy in
November 2001 as part of a proposed new family of surface combatants that is also to
include the small Littoral Combat Ship (LCS).2 The DD(X) replaced a similar proposed
1 CRS Report RL32109, Navy DD(X) and LCS Ship Acquisition Programs: Oversight Issues and
Options for Congress, by Ronald O’Rourke.
2 For more on the LCS, see CRS Report RS21305, Navy Littoral Combat Ship (LCS) Program:
(continued...)
Congressional Research Service ˜ The Library of Congress

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destroyer called the DD-21. The DD(X), which would incorporate several new surface
combatant technologies, is to be a multimission destroyer with an emphasis on the naval
surface fire support (NSFS) mission. It would have a full-load displacement of about
14,000 tons, compared to about 9,000 tons for current Navy cruisers and destroyers. It
would be equipped with two 155-mm (6.1-inch) Advanced Gun Systems (AGSs) for
supporting Marines ashore and 80 missile tubes for Tomahawk cruise missiles and other
weapons. It would have a crew of 125 to 175 persons, compared to more than 300 on
current Navy destroyers and cruisers. In large part due to its reduced crew size, the
DD(X) is to cost substantially less to operate and support than the Navy’s current cruisers
and destroyers.
The CG(X) would be derived from the basic DD(X) design, but would have a
stronger emphasis on air and missile defense. It would have a more powerful radar than
the DD(X), as well as additional missile tubes in the place of the DD(X)’s AGSs. The
CG(X) might be somewhat larger than the DD(X), and would have a procurement cost
equal to or greater than that of the DD(X).
The Navy originally envisaged procuring a total of 16 to 24 DD(X)s, but Navy
officials testified in February and March 2005 that they have a requirement for eight to
12. The FY2005-FY2009 FYDP submitted to Congress in February 2004 called for
procuring the first DD(X) in FY2005, another two in FY2007, two more in FY2008, and
three more in FY2009, for a total of eight ships through FY2009. The FY2006-FY2011
submitted to Congress in February 2005 reduces planned DD(X) procurement to one per
year for FY2007-FY2011, for a total of five ships through FY2009. The FY2006-FY2011
FYDP also accelerates procurement of the first CG(X) to FY2011.
Estimated DD(X) unit procurement costs have increased substantially:
! In 2004, the Navy estimated that the first DD(X) would cost about $2.8
billion to procure, including about $1 billion in detailed design and
nonrecurring engineering costs (DD/NRE) for the class. The Navy now
estimates the cost at $3,291 million (an increase of about 18%), including
$558 million in DD/NRE costs.
! In 2004, the Navy estimated that the second DD(X) would cost $2,053
million to procure; the Navy now estimates the cost at $3,061 million (an
increase of about 49%), including $219 million in DD/NRE costs.
! In 2003-2004, the Navy estimated that subsequent DD(X)s would cost
between $1.5 billion and $1.8 billion each to procure; it now estimates
the cost at about $2.2 billion to $2.6 billion each (an increase of roughly
45%).
The Navy in 2004 proposed incrementally funding the first DD(X) through the
Navy’s research and development account rather fully funding the ship through the
Navy’s ship-procurement account (the Shipbuilding and Conversion, Navy, or SCN,
account), where Navy combat ships traditionally have been procured. Congress, in acting
on the FY2005 budget, directed that the first DD(X) be fully funded in the SCN account.
2 (...continued)
Background and Issues for Congress, by Ronald O’Rourke.

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The DD(X) is being developed by a national industry team lead by Northrop
Grumman’s Ship Systems (NGSS) division (which includes the Ingalls Shipyard in
Pascagoula, MS) and Raytheon Systems Company. The team also includes General
Dynamics’ Bath Iron Works (GD/BIW) of Bath, ME, as well as Lockheed Martin,
Boeing, and several other companies. Under the Navy’s current DD(X) acquisition
strategy, the first DD(X) would be built by NGSS, the second DD(X) would be built
GD/BIW, and contracts for building the first six DD(X)s would be equally divided
between NGSS and GD/BIW. In February 2005, however, Navy officials announced that
they were considering seeking approval from the Office of Secretary of Defense to instead
hold a one-time, winner-take-all competition between NGSS and GD/BIW to build all
DD(X)s.
Table 1 on the next page shows funding for the DD(X) and CG(X) programs through
FY2011.
Issues For Congress
Potential oversight issues for Congress for the DD(X) and CG(X) programs include
the following:
DD(X) Numerical Requirement. The Navy has not explained in detail why the
total number of DD(X)s to be procured has declined by 50%, from an earlier envisaged
range of 16 to 24 to the current requirement for eight to 12. To what degree was this
reduction driven by affordability considerations rather than changes in operational
requirements? In light of current ambiguity in Navy planning regarding the future overall
size and structure of the fleet3 and recent year-to-year instability in Navy shipbuilding
plans, what is the chance that the Navy might change this figure again?
DD(X) Naval Surface Fire Support Mission. The size and cost of the DD(X)
reflects in part the presence on the ship of the two AGSs, which in turn reflects a Navy
desire to increase the fleet’s naval surface fire support (NSFS) capability. A November
2004 Government Accountability Office (GAO) report concluded that “The Navy and
Marine Corps have only recently begun the process to establish validated NSFS
requirements that address the overall capabilities needed and the balance between
different systems that will be required to provide effective, continuous, and sustaining
support fire for forces operating ashore.”4 DD(X) supporters could argue that the
geography of places like the Korean Peninsula as well as the ability of Navy ships to
remain on station for months at a time without interruption are reasons for maintaining
a robust Navy NSFS capability. DD(X) skeptics can argue that NSFS did not play a major
role in U.S. military operations in Kosovo, Afghanistan, and Iraq, and that Afghanistan
and Iraq highlighted new concepts for ground operations using smaller-sized ground units
supported by aircraft armed with relatively inexpensive, all-weather precision-guided
munitions, raising questions about the priority of NSFS compared to other investments.
3 For a discussion of this issue, see CRS Report RL32665, Potential Navy Force Structure and
Shipbuilding Plans: Background and Issues for Congress, by Ronald O’Rourke.
4 Government Accountability Office, Information on Options for Naval Surface Fire Support,
GAO-05-39R, Nov. 2004, p. 2.

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CRS-4
Table 1. Funding For DD(X)/CG(X) Program, FY2002-FY2011
(millions of then-year dollars, rounded to nearest million)
FY02-

02
03
04
05
06
07
08
09
10
11
FY11
Research, Development, Test & Evaluation, Navy (RDTEN) account
DD(X)
505
909 1015 1164 1085
794
445
282
279
323 6801a
CG(X)
0
0
0
0
30
110
279
365
397
403 1584a
Subotal RDTEN
505
909 1015 1164 1115
904
724
647
676
726 8385a
Shipbuilding and Conversion, Navy (SCN) account (including advance procurement)
DD(X) 1
0
0
0
220
666 2405
0
0
0
0
3291
Construction
0
0
0
22
306 2405
0
0
0
0
2733
DD/NREb
0
0
0
198
360
0
0
0
0
0
558
DD(X) 2
0
0
0
84
50
163 2764
0
0
0
3061
Construction
0
0
0
5
40
120 2677
0
0
0
2842
DD/NREb
0
0
0
79
10
43
87
0
0
0
219
DD(X) 3
0
0
0
0
0
0
51 2492
0
0
2543
DD(X) 4
0
0
0
0
0
0
0
51 2579
0
2630
DD(X) 5
0
0
0
0
0
0
0
0
50 2186
2236
DD
(X) 6+
0
0
0
0
0
0
0
0
0
0
0
CG(X) 1
0
0
0
0
0
0
0
0
0 3210
3210
Construction
0
0
0
0
0
0
0
0
0 2710
2710
DD/NREb
0
0
0
0
0
0
0
0
0
510
510
CG
(X) 2+
0
0
0
0
0
0
0
0
0
0
0
Subtotal SCN
0
0
0
304
716 2568 2815 2543 2629 5396 16971
TOTAL
505
909 1015 1468 1831 3472 3539 3190 3305 6122 25356
Source: U.S. Navy data provided to CRS on March 24, 2005.
a. Additional funding required after FY2011. Figures do not include $1,111.4 million in research and
development funding provided for the DD-21/DD(X) program in FY1995-FY2001. FY2006 Navy
budget justification books reflect a different division of total RDT&E funds between DD(X) and
CG(X) for FY2007-FY2011.
b. Detailed design and nonrecurring engineering costs for the class.
Readiness of New DD(X) Technologies. Navy officials argue that they have
taken steps to ensure that the several new technologies scheduled for the DD(X) would
be ready for the lead DD(X), including the use of land-based engineering design models
(EDMs) for verifying new technologies and increased levels of development funding.
Skeptics are concerned that in spite of these steps, one or more critical technologies may
not be ready for the lead DD(X). A March 2005 GAO report expressed concern about the
maturity of several new technologies intended for the lead DD(X) and about the Navy’s

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fall-back plans in the event that one or more of these technologies do not mature in time
to support the Navy’s lead-ship construction schedule.5
DD(X)/CG(X) Affordability And Cost Effectiveness. Given the substantial
increase in estimated DD(X) procurement costs reported in the FY2006 budget, would the
DD(X) and CG(X) programs still be affordable and cost effective? The decision to reduce
DD(X) procurement to one ship per year in FY2007-FY2011, which appears to have been
driven in large part by affordability considerations, suggests that, unless budget conditions
change, the Navy may never be able to afford to procure more than one DD(X) or CG(X)
per year. A one-per-year DD(X)/CG(X) procurement rate, if sustained for a period of
many years, might not be enough to maintain the cruiser-destroyer force at desired levels.
The prospect of a one-per-year rate might also raise questions about the potential cost
effectiveness of the DD(X)/CG(X) effort when measured in terms of average unit
acquisition cost, which is the average cost to develop and procure each ship. Given the
several billion dollars in research and development funding programmed for the
DD(X)/CG(X) effort, if DD(X)s or CG(X)s are procured at a rate of one per year for 20
or fewer years and the combined number of DD(X)s and CG(X)s is consequently 20 or
less, then the average acquisition cost for the DD(X)/CG(X) effort could be more than $3
billion per ship. Supporters could argue that even if unit acquisition cost has increased,
the low annual operating and support costs of the DD(X) and CG(X) would keep the
DD(X)/CG(X) effort cost effective when measured in terms of total ownership cost,
which is the sum of acquisition cost plus life-cycle operating and support costs.
CG(X) Missile-Defense Mission. CG(X) supporters argue that the ship will be
cost-effective in part because of its missile-defense capabilities, including its ability to fire
a proposed ballistic missile defense interceptor called the Kinetic Energy Interceptor
(KEI). Skeptics could argue that funding for development of the KEI was substantially
reduced in the FY2006 budget, raising questions about whether the KEI will be fielded,
that if the KEI is based at sea, it might be better to base it on submarines (for boost-phase
missile defense) or non-combatant surface ships (for mid-course defense), and that if KEIs
are to be based on a surface combatant, the Navy could retrofit them onto some or its
existing Aegis cruisers or destroyers. Supporters could argue that even if the CG(X) does
not carry the KEI, its powerful radar could still contribute to missile defense operations,
and the ship would still be needed for air-defense operations.
Shipbuilding Industrial Base. Some observers, particularly those connected
with the surface combatant industrial base, are concerned that the Navy’s DD(X)
procurement plan would not provide enough work to maintain the financial health of both
NGSS and GD/BIW. They are even more concerned about the Navy’s idea for holding
a one-time, winner-take-all competition between NGSS and GD/BIW to build all DD(X)s,
because the consequences for the yard that loses such a competition could be very serious.
Several Members of Congress have expressed their opposition to the idea of a winner-
take-all competition.
5 Government Accountability Office, DEFENSE ACQUISITIONS: Assessments of Selected Major
Weapon Programs, GAO-05-301, Mar. 2005, pp. 47-48. See also Government Accountability
Office, DEFENSE ACQUISITIONS: Challenges Facing the DD(X) Destroyer Program, GAO-
04-973, Sept. 2004, and Government Accounting Office, DEFENSE ACQUISITIONS:
Assessments of Major Weapon Programs, GAO-04-248, Mar. 2004, pp. 45-46.

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Options for providing additional work for NGSS and GD/BIW during the period
FY2006-FY2011 include procuring additional Arleigh Burke (DDG-51) class Aegis
destroyers, accelerating procurement of amphibious ships, transferring production of
LCSs to NGSS or GD/BIW, modernizing Aegis cruisers and destroyers (perhaps more
extensively than planed by the Navy), and expanding and accelerating the procurement
of new cutters under the Coast Guard’s Deepwater acquisition program.6
One option for supporting NGSS and GD/BIW in FY2011 and beyond, particularly
as a hedge against the possibility the DD(X)/CG(X) program is terminated due to
concerns about affordability or cost effectiveness, would be to start design work now on
a less expensive surface combatant that might be ready for lead-ship procurement in
FY2011. Compared to the DD(X)/CG(X) design, a less-expensive ship might be more
easily affordable within available resources at a rate of two per year. A program
procuring two ships per year might be better able to maintain the cruiser-destroyer force
at desired levels over the long run, and might be easier to divide between two shipyards.
Potential Options For Congress. Potential options for Congress, some of
which can be combined, include the following:
! approve the DD(X) program as proposed by the Navy and supplement the
industrial base, if needed, with additional DDG-51s, amphibious ships,
transferred LCSs, Aegis ship modernizations, or Deepwater cutters;
! accelerate procurement of the lead DD(X) to FY2006 and the second
DD(X) to FY2007 to better support the industrial base;
! defer procurement of the lead DD(X) to FY2008 to provide more time for
maturation of key technologies;
! procure two or more DD(X)s per year to reduce DD(X) unit procurement
costs and better support the industrial base;
! build DD(X)s at a single yard, or build each DD(X) jointly at two yards;
! terminate the DD(X) program now, or after procuring a single ship as a
technology demonstrator, and supplement the industrial base with
additional DDG-51s, amphibious ships, transferred LCSs, Aegis ship
modernizations, or Deepwater cutters;
! start design work now on a smaller, less expensive alternative to the
DD(X)/CG(X) design — such as a ship about the same size as today’s
9,000-ton Aegis cruisers and destroyers — and procure this new design,
rather than DD(X)s or CG(X)s, starting around FY2011.
Legislative Activity for FY2006
On March 17, 2005, the Senate passed an amendment (S.Amdt. 182) adding a
provision (Section 510) to the budget resolution (S.Con.Res. 18) expressing the sense of
the Senate that a winner-take-all strategy for the DD(X) program would be ill-advised.
The Emergency Supplemental Appropriations Act for 2005 (H.R. 1268) as reported in the
Senate (S.Rept. 109-52 of April 6, 2005) contains a provision (Sec. 1119) that effectively
prohibits the Navy from using a winner-take all strategy for the DD(X) program.
6 For more on the Deepwater program, see CRS Report RS21019, Coast Guard Deepwater
Program: Background and Issues for Congress, by Ronald O’Rourke.

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