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STATEMENT OF

THE HONORABLE JERRY MACARTHUR HULTIN

UNDER SECRETARY OF THE NAVY

AND

THE HONORABLE JOHN W. DOUGLASS

ASSISTANT SECRETARY OF THE NAVY

(RESEARCH, DEVELOPMENT AND ACQUISITION)

AND

VICE ADMIRAL CONRAD C. LAUTENBACHER, USN

DEPUTY CHIEF OF NAVAL OPERATIONS

RESOURCES, WARFARE REQUIREMENTS AND ASSESSMENTS

AND

LIEUTENANT GENERAL JOHN E. RHODES

COMMANDING GENERAL

MARINE CORPS COMBAT DEVELOPMENT COMMAND

BEFORE THE

SUBCOMMITTEE ON SEAPOWER

OF THE

SENATE ARMED SERVICES COMMITTEE

ON

U.S. NAVY SHIP ACQUISITION

MARCH 17, 1998

Mr. Chairman, distinguished members of the Subcommittee, thank you for this opportunity to discuss the Department of the Navy's shipbuilding programs and the FY 1999 budget request.

We are here to provide the committee with the Department of the Navy's fiscal year 1999 plans to modernize and recapitalize the surface and submarine fleets, and to present our vision and approach for preparing the Navy and Marine Corps for the future.

Long Range Vision

Both the Department's own Quadrennial Defense Review (QDR) and the complementary National Defense Panel (NDP) share the view that the future strategic environment portends clear challenges to U. S. forward deployed naval forces. The QDR acknowledged that our conventional military dominance will drive future adversaries to use asymmetric responses to attack our forces and interests overseas--specifically to delay or deny U. S. access to critical regions and facilities. Dealing with such asymmetric challenges is a key element of the U. S. defense strategy, from fielding new capabilities to adapting how U. S. forces operate in future contingencies.

The NDP reinforced the Pentagon's assessment by stating that the United States "must radically alter the way in which we project power." The panel's report predicted that future adversaries would seek ways to maximize their strengths and exploit our weaknesses. They specifically noted that these competitors may target fixed forward ports, bases, and prepositioned assets with WMD and ballistic and cruise missiles to deny us access and to inflict the greatest number of casualties. Our budget contains capabilities designed to thwart these tactics and permit naval expeditionary forces to continue their ability to pursue U. S. national interests against opposing anti-access systems.

We also agree with the NDP that "the cornerstone of America's continued military preeminence" is our ability to project combat power rapidly and virtually unimpeded to widespread areas of the globe. This cornerstone is dependent on our capacity to gain and sustain access to critical regions far from our shores. As both reports underscored , a combination of adaptive enemies, emerging technologies, coalition political conditions, and geographic realities are creating greater challenges to U. S. power projection forces. This challenge is most evident in the littoral regions of the world. Clearly, the littoral regions represent where we will fight. It is now home to 75 percent of the world's population and 80 percent of the world's capitals. It is the intersection for the vast majority of the world's commercial traffic and economy.

But it is not enough to know where we must be prepared. Another aspect of the strategic environment is anticipating how we will fight, and how future opponents might seek to oppose us. As stated in the NDP's report, Transforming Defense, "the cutting edge ability to accomplish U. S. national security objectives will come from new approaches and new thinking about power projection and asymmetric warfare capabilities." The new operational concepts and resulting programs we have put in place since ForwardFrom the Sea was first promulgated in 1994 represent just the sort of new approaches and new thinking needed in tomorrow's chaos-filled littorals. These concepts have been carefully formulated to ensure we retain the ability to project powerful naval expeditionary forces to shape regional environments and respond decisively to crises ranging from humanitarian assistance relief to major conflicts.

Our major concepts, including the Navy Operating Concept (NOC) and Operational Maneuver from the Sea (OMFTS), have all been developed in response to new strategic and operational conditions that must be mastered if we are to successfully pursue U. S. global interests. OMFTS is the Marine Corps capstone operational warfighting concept for the 21^st Century. It is applicable across the full range of military operations, from major theater war to smaller scale contingencies. It is more than a road map to the future, it is a "catalyst" to stimulate a process of proposal, debate, and experimentation building on the foundation laid by "From the Sea" and ForwardFrom the Sea." It is a naval concept developed by the Marine Corps and executed in concert with the Navy. It places unprecedented emphasis on the littorals and demands cohesiveness between naval forces.

OMFTS capitalizes on naval forces' ability to use the sea as a maneuver space. The intent in employing this concept is to deliver a decisive blow against an enemy's center of gravity. OMFTS is our central warfighting concept for the next century, and one that is central to understanding our naval support requirements for littoral warfare missions. A key element in these new concepts is the sea-basing of command and control, logistics, and the preponderance of fire support functions. Sea-basing reduces the force's "footprint" ashore and greatly minimizes its vulnerability. Sea-basing thus allows putting the "teeth" ashore while leaving the logistics "tail" afloat.

The Navy Operational Concept (NOC), published in March of 1997, articulates the Chief of Naval Operation's vision for driving the ongoing process of innovation and adaptation in littoral warfare. The NOC sets forth a high standard for our sister Service--the "ability to dominate the littoral, including the undersea environment," which will allow "us to operate with impunity in the face of enemy area denial threats."

Making the NOC and OMFTS into realities vice conceptual documents requires a focused effort and carefully crafted naval shipbuilding program. Being able to "dominate the littoral" and "operate with impunity" in the demanding operational context we have defined as "chaos in the littorals" can only be accomplished with serious investments in littoral warfare mission areas. Projecting power globally into the littorals necessitates naval support programs for amphibious lift, maritime prepositioning, mine warfare and naval surface fire support. Without these capabilities, battlespace dominance in the littorals is merely a goal. The following initiatives are key to the achievement of our desired operational capabilities.

Shipbuilding Programs

The FY 1999 budget request for Shipbuilding and Conversion (SCN) includes $5.7 billion for the acquisition of three ARLEIGH BURKE (DDG 51) Class guided missile destroyers, one SAN ANTONIO (LPD 17) amphibious transport dock ship, one New Attack Submarine (NSSN), one oceanographic ship (TAGS), and the last Large Medium Speed Roll-On/Roll-Off vessel. The FY 1999 SCN budget request also includes funding for advance procurement and advance construction of components for CVN 77.

Shipbuilding Industrial Base

The Department's shipbuilding plan continues to stabilize a fragile nuclear and surface combatant industrial base that includes the shipbuilders and suppliers that provide equipment and engineering services which support Navy shipbuilding programs. The CVN 77 replacement carrier programmed in FY 2001 and the innovative teaming strategy approved by Congress last year for the construction of four New Attack Submarines over the next five years maintains the submarine and aircraft carrier nuclear industrial base. In a similar manner, the DDG 51 multiyear contract implements a long-term acquisition strategy that lowers costs, reduces disruptions from hiring and layoff cycles, level-loads employment, and encourages capital investments; thus improving the performance, efficiency, and viability of the complex surface combatant industrial base. These actions are key steps in a continuing effort to ensure the long term viability of the shipbuilding industry to support our future construction programs for the 21^st Century.

The downsizing of the Navy and the lack of significant American commercial shipbuilding business has resulted in a reduction in the number of ships under construction in U.S. shipyards from 181 in 1980 to 65 in 1998 - a 64% decrease. During this same period Navy shipbuilding has declined from 108 to 44 ships. If the current trend continues, Navy shipbuilding could drop to the low 20s over the next five years. This decline in shipbuilding demand is of great concern to the Navy and DoD because it carries an extra cost burden on remaining shipbuilding programs. In response to the Quadrennial Defense Review's (QDR) projections of Navy new construction, the Department in partnership with the Office of the Secretary of Defense initiated a comprehensive review of the current shipbuilding industrial base. The study is in its final stages, having benefited from up-front shipbuilder involvement. The results of the study are anticipated this spring and will help determine:

If the Navy should place future ship construction contracts without regard to possible yard closings.

If DoD should take a position with respect to mergers and consolidations within the domestic shipbuilding industry.

While it is recognized that the volume of commercial work is still quite low, new commercial opportunities available to U.S. shipyards are promising. A prime example is the construction of two cruise ships in the United States - a project that has not been undertaken since 1957. The level of complexity of these ships ensure preservation of shipbuilding skills that can be readily translated to naval warship construction. The Navy continues to support and promote the industry opportunities for Foreign Military Sales and direct commercial sales for Navy contractors.

Finally, the Navy has to continue to promote expansion of the traditional Navy shipbuilders into the commercial marketplace. Programs that benefit the industry by promoting commercial shipbuilding, such as a strengthened National Defense Features program are important. These programs will not only promote commercial practices, but will provide much needed naval assets in a timely manner.

Aircraft Carrier Programs

The aircraft carrier is the centerpiece of Navy forward presence. As the leading edge of the Nation's defense capability, aircraft carriers project American power like no other weapons systems in our arsenal. Using historical data, we can expect a carrier to respond to approximately 20 major crises and possibly three major conflicts, conduct over 500,000 aircraft launches and recoveries, spend approximately 6,000 days at sea, steam a total of three million nautical miles, and house over 100,000 men and women during its operational service. Maintaining the QDR-directed force structure of 12 aircraft carriers and upgrading their capabilities to meet future threats while drastically reducing ownership costs is a critical challenge in accomplishing the Navy's overall mission.

Carrier Maintenance and Modernization

The maintenance and upgrade of our nuclear carriers is accomplished through the Incremental Maintenance Plan, of which the Refueling Complex Overhaul (RCOH) is the industrial availability to extend the life of our existing fleet well into the 21^st Century. We will shortly be executing the FY 1998 funded RCOH for USS NIMITZ (CVN 68), and our FY 1999 budget request contains $275 million to continue funding of the RCOH Advance Planning for USS EISENHOWER (CVN 69). Such investments are vital to recapitalization of these national assets.

CVN 77

Our aircraft carrier acquisition program responds to future challenges and requirements with a two-track strategy. The near-term track of this strategy is CVN 77, the tenth NIMITZ Class and the first carrier of the 21^st Century. The FY 1999 budget request includes $38 million in RDT&E funding to support incorporation of critical transition technologies in CVN 77. Technology innovations fielded in CVN 77, which are targeted to achieve a 15% reduction in Operation and Support Costs, will also be backfit as feasible in the other nine ships of the NIMITZ Class through the Carrier Improvement Plan, and forward fit to achieve cost savings and risk reduction in the next class, CVX. Responding to FY 1998 Congressional action, we have substantially revised the Department's SCN funding profile for CVN 77 in the FY 1999 budget submission. Including the $48.7 million provided by the FY 1998 Appropriations Act, we have applied a total of $241 million above the advance procurement for nuclear components, for non-nuclear advance procurement and advance construction of components in FYs 1998 through 2000. With assistance in top line accommodation from the Office of the Secretary of Defense and the Office of Management and Budget, we accelerated the full funding of CVN 77 one year to FY 2001. The resultant profile, which shortens the production gap between CVN 76 and CVN 77, will provide significant industrial base benefits and savings while balancing other shipbuilding priorities.

CVX

The second, and long-term, part of our two-track strategy is a new ship class and a new vision: CVX. The Navy's vision for CVX is to develop a new class of aircraft carriers to significantly reduce total ownership cost and incorporate an architecture for change and flexibility, while maintaining the core capabilities of Naval aviation (high-volume firepower, survivability, sustainability and mobility) for the 21^st Century and beyond. Achieving this vision will require significant design changes to incorporate advances in technology and to focus the design on enhanced affordability since little carrier research and development has been undertaken since the 1960's. The Navy's FY 1999 plan for CVX includes $40 million in RDT&E funding for feasibility and trade studies supporting CVX design and a Milestone I decision. The FY 1999 request for CVX also includes $149.5 million in RDT&E funding for the development of critical technologies. These R&D efforts include: advanced technology catapult, advanced propulsion concepts, enhanced survivability features, integrated information management technologies, automation for reduced manning, and computer aided design tools. It is crucial that these critical technologies are started in FY 1999 to ensure that CVX can reduce the total cost of ownership of its aircraft carriers and meet its required Initial Operational Capability date of 2013.

Aircraft Carrier Acquisition Structure

Recognizing the critical importance of our nation's aircraft carriers, we are also in the process of implementing a significant organizational change to provide increased management focus to these programs.

Arleigh Burke (DDG 51) Class Aegis Destroyers

The cornerstone of our new construction surface combatant effort remains the DDG 51 Class Program. The FY1999 budget request includes $2.674 billion for the procurement of three DDG 51 Class guided missile destroyers, the second increment of the four year, 12 ship, multiyear contract with option for 2 additional ships. The Navy awarded the FY1998-2001 multiyear shipbuilding contracts on March 6, 1998.(6+1 option to Ingalls, 6 to BIW). This innovative acquisition strategy allowed the Navy to achieve competition, stabilize the surface combatant industrial base, and save up to $1.4 billion across the four year period.

The three ARLEIGH BURKE Class destroyers procured in FY1999 will be Flight IIA ships with improved warfighting capabilities inherent to Baseline Seven of the AEGIS Combat System. AEGIS Combat System Baseline Seven includes the upgraded SPY-1D(V) radar system, the new Advanced Integrated Electronic Warfare system, area Theater Ballistic Missile Defense, Cooperative Engagement Capability, the longer-range 5"/62 gun, Extended Range Guided Munitions, advanced processing, and Remote Minehunting System. In terms of missions and capabilities, the AEGIS Baseline Seven ships will provide improved long range surface fire support and precision land attack, area ballistic missile defense, and organic minehunting.

Total ownership costs have also been reduced by aggressive implementation of "smart ship" and Commercial-Off-The-Shelf (COTS) initiatives. Selective implementation of proven commercial technologies such as data multiplexing, machinery control, integrated condition assessment and damage control have been incorporated into the FY1998-2001 multiyear baseline. New technologies such as remote source lighting (a lighting system which carries light from a centralized light source to lenses at the point of illumination via fiber optic cables) and composite fairwaters will also be introduced to reduce total ownership costs.

Future Baselines (Baseline seven Phase II) will provide fully integrated land attack capability and a fully developed advanced processing architecture. Naval Surface Fire Support (NSFS) will be provided as part of the NSFS Weapon Control System (NWCS) interface. The Naval Tactical Missile System (NTACMS) or the Land Attack Standard Missile (LASM) will be integrated with the AEGIS Weapon System and the vertical launch system will be upgraded. A counter-battery/counter-fire capability will be developed as a part of this land attack capability. The Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance capabilities will also be upgraded to provide land attack connectivity in the littoral environment.

The advanced processing architecture will be further developed to replace remaining legacy system interfaces and provide a computational foundation for the emerging Navy Theater Wide Ballistic Missile Defense capabilities as well as future land attack warfare developments. The software will continue to be modified to support a fully distributed processing approach for improved efficiency, availability, and software maintainability. Additional significant enhancements will be made in this future baseline in the areas of electronic attack, surface surveillance, and identification in support of all warfare areas. Weapon system upgrades will be made to fully integrate the SM-2 BLK IIIB and Lightweight Hybrid Torpedo and to upgrade the LAMPS and Tomahawk systems. IT21 and C4I upgrades will improve both internal and external communications to aid the warfighter in the face of the anticipated varied 2010 threats.

These capabilities will be developed in such a way that they can be backfit into the earlier Baseline seven DDG 51 class ships and into the Baseline two CG 47 class ships as a part of the cruiser modernization program. These capabilities are critical for naval expeditionary forces operating in the littorals.

DD 21 Class Destroyer

The FY 1999 budget requests includes $84 million to continue RDT&E for development of the Navy's newest destroyer, the DD 21 Land Attack Destroyer. The

DD 21 replaces the highly successful DD 963 and FFG 7 Classes of destroyer and frigate in today's inventory. The DD 21 will be a true fleet destroyer, capable of handling any mission that a Fleet commander might ask, from key wartime missions in land attack and undersea warfare to the more mundane, but equally important presence missions, noncombatant evacuations, escort, and diplomatic missions that have been closely associated with Navy destroyers for almost a century.

As with previous destroyer designs, DD 21 will be focused on the key mission areas facing the nation and the Navy during its design phase. Today, the Navy needs a destroyer that is capable of exceptional performance in the littoral regions of the world and one that can provide significant support to forces ashore. As a result, DD 21 must excel in mission areas that include land attack and maritime dominance. Given the large inventory of upgraded CG 47 and new DDG 51 Class ships that will be in the fleet by the time the first few DD 21 class ships begin to join the fleet after 2008, a robust self defense capability in air defense will be sufficient for this ship.

Cost is a key factor in the design of these ships. Projected shipbuilding budgets, declining operations and maintenance budgets, coupled with a need to recapitalize our submarine, aircraft carrier, and logistics fleets in the early 21st Century dictate that DD 21 must be an affordable ship to build and operate. This has led the Navy to seek, and find, new approaches to ship design and acquisition and apply them to DD 21. The DD 21 program is fostering increased industry involvement and enhanced opportunities for industry competition through use of innovative acquisition strategies and is currently considering use of Section 845/804 authority for the first portion of the DD 21 development process. The surface combatant acquisition community has been completely reorganized to allow for this, and the Navy's FY 2000 budget request will show a significant realignment of our DD 21 funding request as the full effects of the revolutionary acquisition strategy for DD 21 take effect. Competitive industry involvement is critical to the success of this program, and the Navy is working closely with the Office of the Secretary of Defense to foster a competitive environment.

Leveraging Arsenal Ship Investment for DD 21

The Navy has fully incorporated the Maritime Fire Support Demonstrator (MFSD) lessons learned into the DD 21 program. This included transferring all of the MFSD contract deliverables and the bulk of the people working on MFSD to the DD 21 Program Office. A full analysis of all three Maritime Fire Support Demonstrator proposals has been completed, and the good aspects of the program, of which there were many, are being fully incorporated in the DD 21 and CVX programs.

The Navy incorporated the MFSD lessons learned into the DD 21 program. Besides transferring all of the contract deliverables and most of the personnel supporting the MFSD program to the DD 21 Program Office, the Navy also incorporated key MFSD precepts into the DD 21 acquisition strategy including:

Early industry involvement to reduce life-cycle costs and to focus contractor expertise on total ship integration.

The use of Section 845 contracting strategy to encourage Industry participation and innovation.

Employment of state-of-the-art engineering tools for Modeling and Simulation and Computer Aided Design (CAD) to explore the effects of alternative system characteristics on system performance and life cycle cost.

Extensive use of commercial components to meet the cost effectiveness requirements levied on the program.

Integration of industry risk mitigation techniques along with an appropriate mix of at-sea and land-based testing.

Use of "Cost as an Independent Variable" (CAIV) principles to ensure meeting the cost and affordability goals of the program.

The Navy has completed an exhaustive review of the MFSD industry team proposals, and has determined that a significant number of the technical concepts used for MFSD are also applicable to DD 21. Two examples are revolutionary manning and signature reduction initiatives. Although the MFSD program was not afforded the opportunity to demonstrate these and other innovative technologies at sea, it is clear that much of the effort pursued for MFSD support the requirements levied upon for DD 21.

TICONDEROGA (CG 47) Cruiser Conversion Plan

The Navy has funded a plan to enhance and extend the capability of 12 of the 27 existing CG 47 class ships in the FYDP. The FY 1999 budget request includes $20.0 million in RDT&E for a mid-life upgrade of these ships to enhance their combat systems capability for the new TBMD mission area. Other enhanced combat capabilities envisioned for these highly capable ships include a new Area Air Defense Commander suite and upgraded land attack capability. In addition, these ships will continue to be upgraded with the "Smart Ship" technologies successfully demonstrated on USS YORKTOWN (CG 48) in 1996 and 1997. Finally, by extending the useful service life of the combat system onboard these highly capable combatants, we will be able to delay the introduction of CG 21, the follow on ship to DD 21, and second member of the SC 21 "family of ships". This will allow the Navy to build additional lower-cost DD 21.

Naval Surface Fire Support

OMFTS places increasing demands on Naval Surface Fire Support (NSFS). Sea-based fire support will be required to support joint forces and must be able to integrate all fires with maneuver forces over a more extended battlespace. NSFS must provide various types of fires and levels of responsiveness. Near and mid-term initiatives to meet NSFS requirements include improving existing guns and developing an extended range guided munition (ERGM) and a rapid response land attack missile. This effort offers a level of range and accuracy never before seen in a sea-based fire support system. Such a revolutionary improvement is worthy of the Committee's full support.

These improvements will enable NSFS to effectively support OMFTS operations and give MAGTF commander the requisite support essential for executing his missions. These enhancements will provide a critical boost to naval littoral capabilities and result in extended, more accurate and more lethal support to maneuver forces ashore. As Admiral Johnson, the Chief of Naval Operations, recently stressed in an article entitled Anytime, Anywhere: A Navy for the 21^st Century, the Navy's purpose and focus has shifted to ":influence directly and decisively events ashore." Our current NSFS program is one way for this goal to be achieved.

Amphibious Lift (SAN ANTONIO (LPD 17) Amphibious Transport Dock Ship)

The FY 1999 budget request includes $638 million for the second of this 12 ship program. This amount, in conjunction with the $96100M of advance procurement provided by Congress in FY 1998, fully funds this ship.

The San Antonio class will be the first designed, from the keel up, to execute OMFTS and Ship to Objective Maneuver. The operational flexibility of Amphibious Readiness Groups (ARGs) will be significantly enhanced with the FY01 delivery of the USS San Antonio, the first twelve landing assault ships to be procured between FY 1996 and FY 2003. As a class, these ships will overcome amphibious lift shortfalls caused by the decommissioning of aging LPDs, LSTs, LKAs, and LSDs. Maintaining projected delivery schedules and attaining operational readiness of this ship class is key to eradicating existing shortfalls in amphibious lift. Ensuring that the ship maintains a robust self defense capability as threat systems evolve is key to survivability in the littoral environment where the ship will fight.

SEAWOLF (SSN 21)

The USS SEAWOLF (SSN 21) was commissioned in July 1997, the first of a three ship class. Evaluation of SEAWOLF's performance has shown that this submarine is the fastest, stealthiest, and most technologically advanced submarine in the world. The SEAWOLF Class is a multi-mission submarine that can operate autonomously against the world's most capable submarine and surface threats. The FY 1999 budget request includes $27.5 million in RDT&E funding to cover ship testing, lead ship hull coating, and development of solutions for emergent problems.

SEAWOLF (SSN 21) is in the process of conducting Post Delivery Shakedown Period. Pre-Commissioning Unit CONNECTICUT (SSN 22) is 87% completed and is scheduled to be delivered December 1998. SSN 23 is 34% completed and is scheduled to be delivered in December 2001. The program continues to be executed within the Congressionally mandated cost cap.

New Attack Submarine

The FY 1999 budget request includes $1.5 billion for the construction of the second of four New Attack Submarines plus $0.5B for advance procurement for the third ship, that are part of the unique single contract and construction teaming plan approved by Congress last year. The plan is expected to achieve cost reductions for the first four submarines versus a similar build profile for an "allocate and then compete" plan. In addition, it will keep the nations submarine industrial base viable into the next century when stable rate construction can be achieved.

The teaming arrangement is working well. The free exchange of ideas and know-how between experienced construction personnel at both shipyards is resulting in the identification and implementation of improved and more efficient construction. Electric Boat (EB) and Newport News Shipbuilding (NNS) formed fifteen integrated process teams, the teams have been working together over the past year. To date, about 50 NNS personnel have relocated to EB and are participating on the Design Build Teams.

The New Attack Submarine will improve on every aspect of military performance versus the SSN 688 Improved LOS ANGELES Class submarine. It will also equal or better any operational performance of SEAWOLF including stealth, special warfare, littoral warfare, surveillance, and mission flexibility --but for nearly 30 percent less cost. In addition it will incorporate flexibility for future technology insertion.

The United States maintains a capabilities based, multi-mission submarine force that is sized to satisfy peacetime requirements and is not sized to counter any single country's threat. New Attack Submarine production is essential to maintaining a highly effective multi-mission SSN force level of 50 high performance submarines to meet future operational requirements. The New Attack Submarine program is the only new class of submarine in the Navy Future Years Defense Plan.

Submarine Technology

The FY 1999 budget request includes $64 million in RDT&E funding for Advanced Submarine Technology Development Program. Seventeen design enhancements beyond the core design, in comparison to five a year ago, have been approved thus far for final development or insertion in the New Attack Submarine. Both submarine shipbuilders are playing important roles by assisting the Department's efforts to identify additional technologies for insertion opportunities and by identifying design changes that bring a life cycle or construction cost avoidance benefit.

The Advanced Submarine Technology Development will enhance the capability of the Large Scale Demonstrator System to conduct hydrodynamic/hydroacoustic/flow management/maneuvering tests, as well as development of an advanced propulsion system and sensor & processing technologies being considered for insertion in the New Attack Submarine.

Maritime Prepositioning Force (Enhancement)

The FY 1997 budget requested funds for the third and final conversion for the Maritime Prepositioning Force (MPF). Solicitation for this conversion ship was issued in the spring of 1997 with the contract award expected during the third quarter of FY 1998. The first MPFE conversion is proceeding on time within cost. The second conversion is becoming challenging and we face cost and schedule issues that we are working to resolve. The solicitation for the third ship is in process.

The Maritime Prepositioning Force (MPF) is a key element of the Marine Corps' expeditionary capability, providing the rapid deployment of expeditionary forces practically anywhere in the world through link-up of operating forces with prepositioned equipment and supplies. The three current Maritime Prepositioning Ship (MPS) squadrons, composed of thirteen ships, provide our nation a unique geostrategically prepositioned capability. Employment of MPS assets during Desert Shield/Desert Storm and Vigilant Sentinel against Iraq, and in Restore Hope and Continue Hope in Somalia, clearly demonstrated their utility for a wide range of military operations from general combat to disaster relief and humanitarian assistance.

Lessons learned during these operations revealed the need for improvements in MPF capabilities. Our MPF enhancement program will add an additional ship to each squadron (for a total of three additional ships). These additional ships will be loaded with heavy engineer equipment, fleet hospitals, command and control equipment, and expeditionary airfield (EAF) sets. The EAFs will dramatically increase our combined arms combat power without dependence on existing airfields or aircraft carriers. The MPF supports the rapid deployment of marine forces by providing mobile, long-term, storage of equipment and supplies forward deployed near areas of potential conflict. In crisis scenarios, these ships will respond immediately and provide the requisite forces with sufficient and critical sustainability to conduct a host of crisis response missions around the globe.

Strategic Sealift

The FY 1999 budget request includes $251.4 million for the construction of the 19^th and final Large Medium Speed Roll-On/Roll-Off vessel. This fully funds the last ship along with the $35.0 million appropriated for Advance Procurement in FY1998. This year the $251.4 million is funded in the Ship Conversion, Navy account vice the National Defense Sealift Fund.

Oceanographic Survey Ship (T-AGS 65)

The FY 1999 budget request includes $60M for the construction of the T-AGS 65. The FY 1998 Defense Appropriations Act included $16M for advance procurement for the mission electronics and other long lead items in support of the ship. The acquisition and full funding of T-AGS 65 will complete the re-capitalization of the oceanographic survey fleet and maintain it at eight ships. Procurement of this eighth ship will significantly improve the Navy's oceanographic data collection capability to meet existing and emerging Navy, DoD, JCS and other agencies operational requirements.

MARITECH

The MARITECH program is one element of President Clinton's October 1, 1993, five-part plan, Strengthening America's Shipyards: A Plan for Competing in the International Market, to revitalize the U.S. shipbuilding industry by improving their international competitiveness. MARITECH, the technology development element, is aimed at improving the design and construction processes of U.S. shipyards to enhance their ability to compete in world markets. The primary objective of MARITECH is to develop technologies that will help create a much more efficient and productive shipbuilding industry capable of building commercial ships competitively and Navy ships affordably. MARITECH, under Defense Advanced Research Projects Agency management, has been successful. During the last five years, U.S. shipbuilders have focused on catching up with foreign competitors. In order to surpass the competition, MARITECH must be focused on an industry level. Funds were identified in FY1999 to make this transition from shipyard-unique projects to projects that reflect an industry perspective. While DoD and Navy continue to back this worthwhile effort, industry has also shown their commitment by collaborating to develop a comprehensive strategic plan that will focus industry efforts over the next five years.

Conclusion

Both the strategic and operational environment in the 21^st Century will be one of complexity and continuous change. Chaos in the littorals brings both new opportunities and new challenges to the Navy/Marine Corps team, a team that has traditionally worked together to solve problems by developing creative solutions. We are continuing that tradition today, actively moving forward preparing now for whatever the future brings. At the same time, we are providing the shaping and responding capabilities that the QDR called for with "flexible and multi-mission" forces able to respond across the entire conflict spectrum.

With your continued support, we will build naval expeditionary forces with the right capabilities to prevail in the next century. Only with your backing will we be able to "dominate the littoral" and only with serious investments in naval warfare programs will we be able to "operate with impunity" in the demanding littoral context. With your generous support, collectively the Navy/Marine Corps team can bring our transformation strategy to fruition.