Order Code RS21059
Updated May 22, 2006
CRS Report for Congress
Received through the CRS Web
Navy DDG-1000 (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 Navy’s proposed FY2007 budget requests $2,568 million in partial
procurement funding for the first two DDG-1000 destroyers. The House Armed
Services Committee recommended full procurement funding for the first DDG-1000 and
design funding for the second, and said it supports procuring up to two DDG-1000s as
technology demonstrators. The Senate Armed Services Committee recommended
approving the Navy’s FY2007 funding request for the first two ships. For a longer
discussion of the DDG-1000 and CG(X), see CRS Report RL32109, Navy DDG-1000
(DD(X)), CG(X), and LCS Ship Acquisition Programs: Oversight Issues and Options for
Congress, by Ronald O’Rourke. This report will be updated as events warrant.
Background
The DDG-1000 (formerly DD(X)) destroyer and CG(X) cruiser are part of a
proposed new family of surface combatants that also includes the small Littoral Combat
Ship (LCS).1 The DDG-1000 would have a full-load displacement of about 14,564 tons,
which would make it roughly 50% larger than the Navy’s 9,500-ton Aegis cruisers and
destroyers, and larger than any Navy destroyer or cruiser since the nuclear-powered
cruiser Long Beach (CGN-9), which was procured in FY1957. The DDG-1000 is to be
a multimission ship with an emphasis on naval surface fire support (NSFS). It would
incorporate several major new technologies, and be equipped with two 155-mm Advanced
Gun Systems (AGSs) and 80 missile tubes. It would have a crew of about 150, compared
to more than 300 on current Navy destroyers and cruisers. In large part due to its reduced
1 The Navy announced on April 7, 2006, that it had redesignated the DD(X) program as the DDG-
1000 program. The Navy confirmed that the first ship in the class, DDG-1000, will be named the
Zumwalt, in honor of Admiral Elmo R. Zumwalt, the Chief of Naval operations from 1970 to
1974. The decision to name the first ship after Zumwalt was made by the Clinton Administration
in July 2000.
For more on the LCS, see CRS Report RS21305, Navy Littoral Combat Ship (LCS) Program:
Background and Issues for Congress, by Ronald O’Rourke.
Congressional Research Service { The Library of Congress

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crew size, the DDG-1000 is to cost substantially less to operate and support (O&S) than
the Navy’s current cruisers and destroyers. The CG(X) would be derived from the basic
DDG-1000 design, but would have a more powerful radar than the DDG-1000. The
CG(X) might be larger and more expensive than the DDG-1000.
The Navy wants to procure a total of 7 DDG-1000s and 19 CG(X)s as part of a
proposed 313-ship fleet.2 The first two DDG-1000s are to be procured in FY2007, with
each ship being split-funded (i.e., incrementally funded) across FY2007 and FY2008.
The remaining five are to be procured at a rate of one per year in FY2009-FY2013. The
first CG(X) is to be procured in FY2011.
The estimated cost of each of the first two DDG-1000s is $3,291 million, for a total
of $6,582 million. The two ships have received a total of $1,010 million in FY2005 and
FY2006 advance procurement funding. The FY2007 budget requests an additional
$2,568 million in procurement funding for the two ships. The final $3,004 million in
procurement funding for the two ships is to be requested in FY2008. The Navy estimates
that the next three DDG-1000s will cost an average of roughly $2.5 billion each. The
Navy during the latter months of 2005 took steps to reduce the cost of the lead DDG-1000
by about $265 million, and follow-on DDG-1000s by about $214 million each. Table 1
shows DDG-1000 and CG(X) funding through FY2011.
Since September 30, 2005, the Navy has managed the DDG-1000 program through
a series of separate contracts with major DDG-1000 contractors, including Northrop
Grumman’s Ship Systems (NGSS) division (which includes the Ingalls Shipyard in
Pascagoula, MS), General Dynamics’ Bath Iron Works (GD/BIW) of Bath, ME,
Raytheon, and BAE Systems (the maker of the AGS).
Under the Navy’s previous DDG-1000 acquisition strategy of record, which was
approved in February 2004, the first DDG-1000 would be built by NGSS, the second
would be built GD/BIW, and contracts for building the first six DDG-1000s would be
equally divided between NGSS and GD/BIW. In February 2005, Navy officials said they
would seek approval from DOD to instead hold a one-time, winner-take-all competition
between NGSS and GD/BIW to build all DDG-1000s. On April 20, 2005, DOD deferred
this proposal as premature, but agreed to a Navy proposal to separate the DDG-1000
system-development and software-development contracts from the DDG-1000 detailed-
design effort. Section 1019 of the Emergency Supplemental Appropriations Act for 2005
(H.R. 1268/P.L. 109-13) effectively prohibited a winner-take-all competition to build all
DDG-1000s. The provision effectively required the participation of at least one additional
shipyard in the program but did not specify the share of the program that is to go to that
additional shipyard.
On May 25, 2005, the Navy announced that, in light of Section 1019, it wanted to
shift to the “dual-lead-ship” acquisition strategy now proposed in the FY2007 budget,
under which two DDG-1000s would be procured in FY2007, with one to be designed and
built by NGSS and the other by GD/BIW. The Navy is currently reviewing its acquisition
strategy for the third and subsequent DDG-1000s. One possibility the Navy might be
2 For more on the proposed 313-ship fleet, see CRS Report RL32665, Navy Force Structure and
Shipbuilding Plans: Background and Issues for Congress, by Ronald O’Rourke.

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considering would be to have the two yards compete for the right to build the third and
subsequent ships — a strategy that could be viewed as a deferred winner-take-all
approach. Section 125 of the FY2006 defense authorization act (H.R. 1815/P.L. 109-163)
again prohibited the Navy from using a winner-take-all acquisition strategy for procuring
its next-generation destroyer. The provision effectively requires the participation of at
least one additional shipyard in the program but does not specify the share of the program
that is to go to that additional shipyard.
Table 1. DDG-1000/CG(X) Program Funding, 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
DDG-1000
490
895 1002 1120 1068
794
471
369
416
443 7068a
CG(X)
0
0
0
0
60
24
186
328
470
409 1477a
Subotal RDTEN
490
895 1002 1120 1128
818
657
697
886
852 8545a
Shipbuilding and Conversion, Navy (SCN) account (including advance procurement)
DDG-1000 1
0
0
0
220
285 1284 1502
0
0
0 3291d
Construction
0
0
0
0
12b 1271 1502
0
0
0
2785
DD/NREc
0
0
0
220
273
13
0
0
0
0
506
DDG-1000 2
0
0
0
84
421 1284 1502
0
0
0 3291d
Construction
0
0
0
0
12b 1271 1502
0
0
0
2785
DD/NREc
0
0
0
84
409
13
0
0
0
0
506
DDG-1000 3
0
0
0
0
0
0
51 2556
0
0 2607d
DDG-1000 4
0
0
0
0
0
0
0
51 2650
0 2701d
DDG-1000 5
0
0
0
0
0
0
0
0
51 2259 2310d
DDG-1000 6+
0
0
0
0
0
0
0
0
0
50
50
CG(X) 1
0
0
0
0
0
0
0
0
0 3235
3235
Construction
0
0
0
0
0
0
0
0
0 2701
2701
DD/NREc
0
0
0
0
0
0
0
0
0
534
534
CG
(X) 2+
0
0
0
0
0
0
0
0
0
0
0
Subtotal SCN
0
0
0
304
706 2568 3055 2607 2701 5544 17485
TOTAL
490
895 1002 1424 1834 3386 3712 3304 3587 6396 26030
Source: Navy office of Legislative Affairs, March 6, 2006.
a. Figures do not include $1,111.4 million in RDT&E funding provided for DD-21/DD(X)/DDG-1000
program in FY1995-FY2001. Figures also do not include funding for the CG(X) radar in Navy R&D
program element (PE) 0604307N. Additional funding required after FY2011. GAO has reported that
total DDG-1000/ CG(X) RDT&E costs are roughly $10 billion.
b. Funding for procurement of long lead time materials (forgings) for AGSs for each DDG-1000.
c. Detailed design and nonrecurring engineering costs for the class.
d. In the FY2006 budget submission, the second DDG-1000 was to be procured in FY2008 rather than
FY2007, and the estimated procurement costs of the first five DDG-1000s were $3,291 million,
$3,061 million, $2,543 million, $2,630 million, and $2,236 million, respectively.
On November 23, 2005, the Office of the Under Secretary of Defense for
Acquisition, Technology, and Logistics (USD ATL) granted Milestone B approval for the
DDG-1000, permitting the program to enter the System Development and Demonstration
(SDD) phase. USD ATL also approved a low rate initial production quantity of eight

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ships (although the Navy now plans only seven), and separately approved a DDG-1000
Acquisition Program Baseline and Acquisition Strategy Report.
Issues for Congress
Accuracy Of Cost Estimates. Some analysts believe the Navy is significantly
underestimating DDG-1000 procurement costs. The Congressional Budget Office (CBO)
estimated in 2005 that the lead DDG-1000 might cost as much as $4.7 billion, and that
the fifth DDG-1000 might cost $3.4 billion. The Cost Analysis Improvement Group
(CAIG) within the Office of the Secretary of Defense (OSD) reportedly believed in 2005
that DDG-1000 procurement costs may be 20% to 33% higher than the Navy’s revised
estimates. The Navy states that it is confident about its DDG-1000 cost estimates.
Program Affordability and Cost Effectiveness. If DDG-1000 procurement
costs turn out to be closer to the higher CAIG or CBO estimates, this could make it
difficult for the Navy to procure DDG-1000s and CG(X)s in the numbers planned while
still adequately funding other Navy needs. The CAIG and CBO cost estimates are at or
above cost figures provided by DOD and Navy witnesses as figures that would make the
DDG-1000 cost effective. The Navy argues that the ship is more affordable than it
appears from looking only at procurement costs, because it will have lower O&S costs
than existing Navy cruisers and destroyers. They also argue that the DDG-1000 would
be cost effective because the higher procurement cost of the DDG-1000 compared to
previous Navy surface combatants would be more than offset by the DDG-1000’s
improved capabilities. Skeptics could argue that reducing a ship’s future O&S cost,
though desirable, does not make that ship any more affordable to procure in the budget
that funds its procurement, that the DDG-1000’s lower O&S costs only partially offset its
higher procurement costs, particularly when calculated on a present-value basis, as
required by federal guidelines, and that the ship’s capability improvements, though
substantial, may not be worth the ship’s cost, particularly if that cost is closer to the CAIG
or CBO estimates than to the Navy’s estimates.
Potential Implications for Industrial Base. If DDG-1000/CG(X) procurement
is limited for affordability reasons to one ship per year, and the program is divided
between the two yards that currently build the Navy’s larger surface combatants — the
Ingalls shipyard of Pascagoula, MS, which forms part of NGSS and GD/BIW — then the
DDG-1000 program would result in relatively low levels of surface combatant
construction work at the two yards. If DDG-1000 production at some point is
consolidated into one yard, the other yard could face a difficult business situation. If the
other yard were GD/BIW, which focuses on building surface combatants, theoretical
scenarios could include closure and liquidation of the yard, the “mothballing” of the yard
or some portion of it, or reorienting the yard into one that focuses on other kinds of work.
Potential Implications For Force Levels. The Navy’s proposed 313-ship fleet
includes a requirement for a total of 88 cruisers and destroyers — 7 DDG-1000s, 19
CG(X)s), and 62 older Arleigh Burke (DDG-51) class Aegis destroyers. Assuming a 35-
year average life for cruisers and destroyers, maintaining a force of 88 cruisers and
destroyers over the long run would require steady-state procurement rate — that is, a long-
run (35-year) average procurement rate — of about 2.5 ships per year.

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The Navy’s 30-year shipbuilding plan falls short of this steady-state replacement
rate: It would procure an average of about 1.5 DDG-1000s and CG(X)s over the next 17
years, and then two DDG(X)s per year after that. (The DDG(X), not to be confused with
the DDG-1000, is the Navy’s notional long-term replacement for today’s Arleigh Burke
(DDG-51) class Aegis destroyers.) If the Navy’s plan is implemented and extended to a
full 35-year replacement period, the cruiser-destroyer force will reach 88 ships in 2016,
peak at 95 ships in 2021, fall below 88 ships in 2027, reach a minimum of 62 ships (about
30% below the 88-ship goal) in FY2044-FY2046, and recover somewhat after 2020 to a
level of 70 ships — the steady-state level eventually maintained by procuring 2 ships per
year, and about 20% below the 88-ship goal. If, due to affordability considerations, no
more than one DDG-1000 or CG(X) were procured in any given year, then a total of 17
(rather than 26) DDG-1000s and CG(X)s would be procured. The cruiser-destroyer force
under this scenario would reach 88 ships in 2016, peak at 92 ships in 2020-2021, fall
below 88 ships in 2025, reach a minimum of 54 ships (about 39% below the 88-ship goal)
in FY2044-FY2046, and recover after 2050 to a steady-state level of 70 ships.
Mission Requirements. The DDG-1000’s size and procurement cost appear
driven by the ship’s total collection of payload elements, which reflect a February 2004
Operational Requirements Document (ORD) for the DDG-1000. Skeptics might argue
that the ORD might not sufficiently account for how the DDG-1000’s planned capability
(and therefore cost) might reduce DDG-1000 numbers and therefore reduce the collective
capability of the total DDG-1000 force. A potential question is whether some of the
DDG-1000’s planned capabilities are more critical than others, and whether the size and
cost of the ship might be reduced by reducing the less-critical capabilities. As part of the
effort mentioned earlier to reduce the recurring cost of the DDG-1000 design by about
$214 million, the Navy decided to, among other things, reduce the AGS magazine
capacity of the ship from 920 rounds to 600 rounds.
Technology Readiness. The DDG-1000 will incorporate several significant new
technologies. GAO has expressed concerns about whether these technologies will be
sufficiently mature in time for the lead DDG-1000, about the Navy’s lack of fallback
options for many of these technologies, and about the potential for problems in
technology development to add time and cost to the DDG-1000 program. The Navy
argues that development of DDG-1000 technologies is proceeding well, that the new
technologies will be sufficiently mature to support the lead DDG-1000 as currently
scheduled, and that allowing more time for further maturing the technologies before
proceeding with DDG-1000 procurement would add time and cost to the DDG-1000 and
other programs.
Potential Options for Congress. Potential options for Congress, some of which
can be combined, include the following:
! approve the DDG-1000 program as proposed by the Navy;
! defer procurement of the second DDG-1000 to FY2008 to permit that
ship to benefit more fully from lessons learned in building the first ship;
! use a block-buy contract for DDG-1000s procured during the five-year
period FY2007-FY2011;
! procure no more than one or two DDG-1000s for use as technology
demonstrators, and supplement the industrial base with other work; and
! start design work now on a smaller, less expensive cruiser-destroyer that
preserves core DDG-1000/CG(X) capabilities, and procure this new

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design, rather than additional DDG-1000s or CG(X)s, starting around
FY2011.
Legislative Activity for FY2007
FY2007 Defense Authorization Bill (H.R. 5122/S. 2766). The House Armed
Services Committee, in its report (H.Rept. 109-452 of May 5, 2006) on H.R. 5122,
recommended full procurement funding for the first DDG-1000 and design funding for
the second. The committee stated:
The committee does not believe the DD(X) is affordable.... the committee
understands there is no prospect of being able to design and build the two lead ships
for the $6.6 billion budgeted....
Originally, the Navy proposed building 32 next generation destroyers, reduced that
to 24, then finally to 7 in order to make the program affordable. In such small
numbers, the committee struggles to see how the original requirements for the next
generation destroyer, for example providing naval surface fire support, can be met....
By reducing the requirements for the DD(X), a smaller, less expensive destroyer could
be procured in greater numbers. Because of its expense, the committee does not
believe that DD(X) will be procured in sufficient numbers to meet the operational
need.... The committee supports the construction of up to two DD(X)s to
demonstrate technologies that could be incorporated into future, more affordable,
major surface combatants. (Pages 69-70)
The Senate Armed Services Committee, in its report (S.Rept. 109-254 of May 9,
2006) on S. 2766, recommended approving the Navy’s FY2007 funding request for the
first two ships. The committee stated:
The committee agrees with the Navy’s determination that competition is an underlying
benefit of dual sourcing, and that it is critical to meeting the fifth ship cost limitation
established for the next generation destroyer program.
The committee is equally concerned with the risk that the dual lead ship strategy
adds to the program. The committee is aware that the Navy added $150.0 million to
the second lead ship budget to account for this risk. Nevertheless, the Congressional
Budget Office has cited a significantly higher cost estimate for the DD(X) lead ship(s)
than currently included in the Navy’s budget. It is therefore critical that, in preserving
the ability to compete follow-on ships, the Navy does not unduly increase lead ship
cost risk and total program cost risk.
The committee understands that the Navy intends to award lead ship contracts
following approval by the Defense Acquisition Board (DAB), currently planned for
January 2008 [sic: 2007]. The committee urges the DAB to carefully weigh
affordability and risk mitigation considerations in arriving at a decision to approve
award of the lead ship contracts. The committee directs the Secretary of the Navy to
submit a report to the congressional defense committees, 30 days prior to lead ship
contract(s) award, on the Navy’s competition strategy for DD(X) follow ship
procurement. (Page 68)

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