| Navy of Tomorrow, Mired in Yesterday's Politics   Story 4
Author: TIM WEINER
Source: NY Times (Apr 19, 2005) - Subscribe Today!
The Navy's new destroyer, the DD(X), is becoming so expensive that it may end up destroying itself. The Navy once wanted 24 of them. Now it thinks it can afford 5 - if that.
The price of the Navy's new ships, driven upward by old-school politics and the rusty machinery of American shipbuilding, may scuttle the Pentagon's plans for a 21st-century armada of high-technology aircraft carriers, destroyers and submarines.
Shipbuilding costs "have spiraled out of control," the Navy's top admiral, Vern Clark, told Congress last week, rising so high that "we can't build the Navy that we believe that we need in the 21st century."
The first two DD(X)'s are now supposed to total $6.3 billion, according to confidential budget documents, up $1.5 billion. A new aircraft carrier, the CVN-21, is estimated at $13.7 billion, up $2 billion. The new Virginia-class submarine now costs $2.5 billion each, up $400 million. All these increases have materialized in the last six months.
The Navy says it can make do with fewer big ships patrolling the oceans. It wants more fast boats and aircraft to fight offshore and upriver, a speedier force to counter terror. But Congress, seeking to sustain America's shipyards, wants as many big ships as possible.
Admiral Clark, who plans to retire later this year, says both strategies could be sunk by soaring costs.
Philip A. Dur, president of Northrop Grumman Ship Systems, the company primarily in charge of building the first DD(X) destroyer, defends the effort. "No question, the cost of the ship is an issue," Mr. Dur said, though its costs would be justified by state-of-the-art weaponry. Its sophisticated systems would require crews of as few as 125, one-third the size of today's destroyers, and stealth technology would make the 14,000-ton ship appear no larger than a fishing boat on an enemy's radar. But the $3.3 billion to build the first ship "is a big number," he said.
The number became big, fast, because it was kept small at first. John J. Young Jr., the assistant Navy secretary in charge of buying new weapons, said that until recently Navy officials had knowingly "underestimated the price" of the DD(X) destroyer program. "There's a motivation in this building to birth programs," he said, referring to Pentagon proposals to create big new weapons systems. "People tend to understate their costs."
Political haggling may also add to the price. The Navy wants a winner-take-all competition to build the destroyers. But Congress wants to give one to Northrop Grumman's shipyard in Mississippi, the next to General Dynamics' yard in Maine, to share the wealth and ensure more money for the yards.
The dispute drags on. The Navy says the two-shipyard approach will add $300 million or more to the cost of each DD(X). The Navy now hopes to build five DD(X) destroyers, one a year, at a total cost of $20.6 billion, including research and development. But those plans are shaky.
"There is doubt right now among people in the Navy and industry about whether a significant number of DD(X) will be procured," said Ronald O'Rourke, a Congressional Research Service analyst, who obtained the previously undisclosed cost figures for the new destroyers from the Navy.
Unless the costs are controlled, some in the Navy and the shipbuilding industry say, the better alternative may be to finish none of them and skip to the next-generation destroyer.
"The bottom line," Admiral Clark told lawmakers, "is you can't have the Navy of your dreams with the mechanisms that we're using."
Military shipbuilding is a closed mechanism run by two contractors, Northrop Grumman and General Dynamics. Only they can produce the ships the Navy needs.
Mr. Dur of Northrop Grumman calls military shipbuilding "a unique economy."
Unique it is. Between them, the two contracting giants own the six remaining yards that can build American warships, in Maine, Connecticut, Virginia, Mississippi, Louisiana and California. They receive unstinting support from members of Congress representing those states; in turn, the contractors support thousands of smaller suppliers that are often the sole sources for what they make.
Northrop Grumman and General Dynamics do not really compete in the traditional sense, officials say, but share the billions that Congress gives them to build ships, along with benefits like the power to put off paying federal taxes on the profits.
"I don't think we really have competition today," Admiral Clark told Congress. "I think we have apportionment. And I think all of the numbers are now clear that apportionment is costing us money."
The shipbuilding system's critics say it overlays aspects of 19th-century monopoly capitalism and 20th-century state socialism on top of 21st-century American politics.
"It's prehistoric," said Harlan K. Ullman, a senior adviser at the Center for Strategic and International Studies, a research group in Washington that focuses on national security issues. "It's an unbelievably regulated socialist industry, dominated by politics, not rational judgment. Because there is no competition, it's very difficult to get efficiencies. Admiral Clark is absolutely right. We cannot afford the ships we need because the system is so bloated. It's a monstrosity."
The Earth's Biggest Selection |
Mr. Dur of Northrop Grumman said that new ships' costs are going up because the number of ships the Navy wants is going down. Five years ago, the Navy foresaw a fleet as large as 375 warships. Now it says it may go as low as 260.
Mr. Dur said his company invested in equipment and people, expecting the Navy to buy ships at a steady rate. When the Navy's plans "change dramatically from year to year, the assumptions we make are radically altered," he said. "That generates extraordinary costs."
If Congress and the Navy would steadily spend more money buying more ships, he said, the costs for each ship would shrink.
Senator Jim Talent, Republican of Missouri and chairman of the Armed Services Seapower subcommittee, agreed. To smooth out the process, he said, at least $3 billion or $4 billion more a year should be spent on shipbuilders, and "if the costs still go up, then you can challenge them."
Michael W. Toner, executive vice president of General Dynamics Marine Systems, said "the country's ability to design and build naval warships" could be lost unless the Navy steadily builds more.
"Our fragility," he said, "is due largely to the instability of the Navy's shipbuilding plans."
But Mr. Young, the assistant Navy secretary in charge of buying weapons, does not buy that argument.
"The shipbuilders' complaints about stability are way overstated," he said. "If I gave you $30 and told you to eat lunch for a week, you'd find a way to do it. If I said, 'Eat lunch for a week and it costs whatever it costs,' things would come out different."
Shipbuilding executives "don't work as hard as they should to control costs," he said. "They don't work like an automaker facing competition from Japan."
The Navy now has 288 warships, the lowest number since before World War I. But comparing a modern aircraft carrier with an old dreadnought is meaningless. The Navy says military contractors and their advocates in Congress overstate the need to build more big ships. The advocates say the Navy underplays it to spend more on aircraft and sailors.
A top-level Pentagon panel, the Defense Acquisition Board, will decide the fate of the new destroyer on April 29. As of now, Mr. Young said, "we've mapped out a course that has, to everybody's anxiety, five DD(X)." Five and counting.
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