Hirono Questions Navy and Marine Corps Leadership on FY23 Investment Priorities in Seapower Subcommittee Hearing

April 26, 2022

Hirono Questions Navy and Marine Corps Leadership on FY23 Investment Priorities in Seapower Subcommittee Hearing

WASHINGTON, D.C. - Today, Senator Mazie K. Hirono (D-HI), Chair of the Senate Armed Services Subcommittee on Seapower, convened a subcommittee hearing to examine investment priorities for the Navy and Marine Corps for fiscal year 2023 (FY23). In the hearing, she questioned Navy and Marine Corps leadership about budget priorities including fleet size and sustainment, multi-year procurement authority, the proposed reorganization of the Marine Corps, and the modernization of public shipyards, including Pearl Harbor Naval Shipyard in Hawaii.

"The threats we face around the world require us to consider the best way to get the Navy and Marine Corps the resources they need," said Senator Hirono in her opening remarks. "However, it is critical that any shift in priorities for those resources does not come at the expense of important programs that families-including our military families-rely on every day. These programs play a critical role in supporting and advancing our country's strategic interests in the Indo-Asia-Pacific Region - including at bases in Hawaii."

As Chair of the Seapower Subcommittee, Senator Hirono is working to strengthen the readiness and capabilities of the U.S. Navy and Marine Corps. Last year, she helped secure $74 billion in funding for the Navy and Marine Corps in the FY2022 National Defense Authorization Act (NDAA). She also secured language in the FY2022 NDAA to strengthen oversight at the Navy's four public shipyards-including Pearl Harbor.

A link to download video of her opening remarks is available here and a link to download video of her question line is available here. Transcripts of both are below.

OPENING STATEMENT

The hearing will come to order. I would like to welcome our witnesses to the hearing this afternoon to explore various aspects of the Department of the Navy's investment programs - Mr. Frederick Stefany, Performing the Duties of Assistant Secretary of the Navy for Research, Development, and Acquisition; Vice Admiral Scott Conn, Deputy Chief of Naval Operations for Warfighting Requirements and Capabilities; and Lieutenant General Karsten Heckl, Deputy Commandant of the Marine Corps for Combat Development and Integration. Welcome. Thank you for your service to the Nation and for the professional service of the men and women under your command.

I also want to recognize our Ranking Member, Senator Cramer. We had a very productive year working on the fiscal year 2022 Defense Authorization Act and I fully expect to be working very productively with my Ranking Member once again.

We are also grateful to our military families for the vital role they play in the success of the men and women of our Armed Forces. Sadly, last week, we tragically lost three sailors on the USS George Washington. On behalf of this Subcommittee, I would like to offer my deepest condolences to their family members, and to all members of the USS George Washington family.

The Navy and Marine Corps face difficult decisions as they seek to balance competing priorities-including modernizing the fleet, maintaining a technological advantage over our adversaries, supporting ongoing operations, and sustaining today's readiness. The threats we face around the world require us to consider the best way to get the Navy and Marine Corps the resources they need.

However, it is critical that any shift in priorities for those resources does not come at the expense of important programs that families-including our military families-rely on every day. At today's hearing, we will explore various aspects of the Department of the Navy's investment programs. These programs play a critical role in supporting and advancing our country's strategic interests in the Indo-Asia-Pacific Region - including at bases in Hawaii. This Subcommittee plays a crucial role in the oversight of those programs. We must continue to work to ensure we are getting good value for every dollar that we spend.

This year, the Navy is proposing to retire a number of ships before the end of their useful service lives. This includes a plan to retire 9 Littoral Combat Ships early, one of which would only be three years old. The Navy's position is that these vessels would not contribute much to a high-end conflict. However, this plan would result in our fleet size shrinking at a time when we are working to achieve a 355-ship fleet established as the goal several years ago. Less than two years ago, former Defense Secretary Esper published "Battle Force 2045," an updated long-term shipbuilding plan. In this plan, he called for achieving a Navy force even larger than the 355-ship fleet that has been adopted as national policy in Title 10, United States Code.

This Subcommittee is well aware of the Department of the Navy's ongoing challenges facing our air, land, surface, subsurface, and maintenance programs.

The Navy has been using multi-year procurement authority to modernize the fleet more efficiently. Congress has approved the use of this authority to procure attack submarines and AEGIS destroyers. These two platforms had been the largest inventory shortfall compared to the goals outlined in the 2016 Force Structure Assessment. I look forward to hearing today about the Navy's multiyear contract plan for building destroyers over the next five years, and how that plan will address our concerns for a potential shortfall.

We are also well aware of the significant changes the Marine Corps is contemplating in reorganizing itself to deal with operations against near-peer competitors. I expect to hear today how the realignment of the force-to reflect the Commandant's vision for the Marine Corps-is reflected in the plans and programs in the fiscal year 23 budget request.

I am also interested in hearing from Secretary Stefany about the vital role our public Navy shipyards play in maintaining a ready and capable fleet. And while shipyards are not necessarily within what we call the Kuleana of this Committee, it's all tied together because if you build ships, you have to repair and maintain them. I'm encouraged that the Navy has finally gotten serious about investing in this critical shipyard infrastructure that has been neglected for far too long. I look forward to hearing from you this afternoon about how the Fiscal Year 2023 budget supports this shipyard modernizations plan. I also look forward to working with the Navy to ensure that the shipyard modernization program stays on track and that you are requesting the appropriate resources for that plan to proceed.

WITNESS Q&A

Senator Hirono: Mr. Secretary, in my opening statement, I referred to the fact that you are responsible for acquisition and sustainment matters, to include maintenance and the importance of our maintenance availabilities in both the private and public shipyards. What have you done since last year to improve the performance of ship maintenance programs and to keep individual overhauls from being late?

Mr. Stefany: Yes ma'am so we've taken a multiple-pronged approach. We've started with the planning phase and we are putting more resources into planning upfront for an availability, getting the work packages defined, getting the long-lead material bought sooner in the process than we have in the past. In the contracting phase, we've moved to what we call A-minus-120 where we try to award the contracts - I'm talking about our private shipyards now - 120 days before the availability to give the contractor a chance to get up to speed and understand the work before we get into the actual project. And then we have really done a focused effort, what we call a plan to perform, of what are the key criteria for the success of an availability and then make sure we understand the levers that we would pull in order to be able to succeed, right. What are the key things to make sure we are focusing on the most important data to be able to affect the availability once it has started. Except for the contracting part ma'am, we are doing the same type of items on the public shipyards as well - from looking at the availability of equipment upfront at the public shipyards and then doing that plan to perform process where we're really pulling the thread hard on processes within those shipyards.

Senator Hirono: So Mr. Secretary as with the shipbuilding side, on the maintenance side and the repair side, you're probably seeing issues of workers, not enough trained workers and supply chain issues. What specifically are you doing to address those particular problems on the repair side?

Mr. Stefany: Yes ma'am on the repair side yes we are seeing both supply chain delays due to COVID impacts, as well as workforce where we are not having the workforce that we need appear and its happening in new construction as well so your point is very valid. We are working with the regional shipyard associations on pipelines for future workforce to try to get skilled workers from out of the colleges and trade schools into the trade - that's a longer-term thing, it's not happening immediately, but we're seeing younger folks coming into the business through the trade schools we've set up. For the actual work, we actually are illuminating - we have tools to illuminate where our supply chain is really having trouble and trying to attack that in advance ma'am.

Senator Hirono: I think the lack of trained workers has been an issue long before COVID, it's been exacerbated by COVID. I hope that you are doing something to turbocharge the focus on recruiting and retention shipyard workers both on the shipbuilding side as well as on the repair side. I don't have the answers to the lack of workers but it is a major concern ongoing, so you're going to get asked those questions every time you come before either SASC or this Subcommittee. Now there's going to be a gap in the number of America-class LHAs, the amphibious ships. My information is after the fourth total of the eleven originally planned is finished in 2023, then you're not going to get any more of these LHAs for another eight years or so. Was that a budget decision and if so, what happens when you need to resume production or construction of these LHAs and then the shipyard is going to have to ramp up? What happens regarding the construction of these ships at that point with that kind of a long gap?

Mr. Stefany: Yes ma'am. Quickly, on the last one, for workforce we do have funding in the 23 budget to actually go and try to accelerate those workforce development programs - I just want to finish that last question. With this question ma'am, yes the LHA type ships, about five years apart - we call it five-year centers. So the previous ship is in 2023, the next ship most efficiently would be built in 2028. It is an affordability reason, why it's not in as a 2028 ship. It's just in the overall budget is why it's sitting in 2031, but we will relook that in the coming budget cycle ma'am.

Senator Hirono: I would ask that you do that. I want to make sure, regarding the funding for the shipyard modernization - does your Fiscal Year 23 budget fully fund this year's plan for the shipyard modernization plan?

Mr. Stefany: Yes ma'am. The budget this year increased almost $1.8 billion and fully funds all of our plans for 2023 through 2027. Yes ma'am.

Senator Hirono: So when we talk about multi-year contracts, is inflation an issue with regard to how you're going to come up with the negotiations for these multi-year contracts? How do you account for inflation and some of the other factors that may need revisions to the contract?

Mr. Stefany: Yes ma'am. In our shipbuilding contracts we have an economic price adjustment clause, a special clause that we put in that accounts for inflation. It actually makes an assumption and then if it gets outside of that, higher or lower, we can adjust the contract as we go. So in our shipbuilding contracts - we don't have that in other places - but in our shipbuilding contracts we do have what we call an EPA clause to protect the company from risk going up or down.

Senator Hirono: That's good because the issue had come up in the SASC hearing this morning. The Navy has presented a five-year shipbuilding plan that includes 2 destroyers per year, for a total of 10 ships. I understand that the Navy intends to request another round of multiyear procurement authority for destroyers, but for nine ships, with an option to add another ship to the multiyear contract at some point in those five years and an option to buy a third each year for a maximum possible of 15. That's what you're contemplating.

Mr. Stefany: Ma'am yes we are modeling the planned multiyear after the one we have right now, and the one we have right now has ten ships in the multiyear with a competitive option for a third ship in each year. That's the basis for what we plan to do in the future one, the one exception as you noted being that we would have nine firm ships instead of ten firm ships in that baseline contract. But otherwise, the terms that we're anticipating for the new contract will be the same as the one that's in place right now. And that hasn't been approved yet, that's just our initial plan as we're going forward.

Senator Hirono: Just so I understand that then, I know that there is interest in this Committee for 15 destroyers instead of the 10. So you are creating a situation where we can get to 15 if you exercise that option provided that we fund that option which means that you will request funding for that option to be exercised, is that correct?

Mr. Stefany: It is our Navy plan at this point to go forward so that if we did request a third ship, we have the ability to buy it. But again, we're in the early stages ma'am I don't want to make that commitment from the Department yet.

Senator Hirono: Okay but when you say commitment from the Department does that mean you do have to request that money for the additional five?

Mr. Stefany: We would have to request the money for the additional five, yes.

Senator Hirono: And would you do that? Because as I said there's an interest in this Committee-

Mr. Stefany: You've seen the 23 budget ma'am and 24 and out will have to play out through the normal requirements process. So I can't make a commitment on 24 and out, and you've seen our budget proposal for 23 which is only two ships in 23.

Senator Hirono: Okay but going forward though, if - you see what I'm getting at. I think some of us would like to get you to three ships instead of two ships.

Mr. Stefany: So our plan is to have a contract that would allow that but we would have to discuss in the budget process actually how it gets paid for if we were to do that ma'am.

Senator Hirono: Okay I personally would encourage that because I assume that we need more of these ships, right? We need more of these destroyers.

Mr. Stefany: I'll have to let the Admiral discuss actually the requirements for destroyers.

Senator Hirono: Admiral?

Vice Admiral Conn: The requirements for large surface combatant is 96, at least from the latest Integrated Naval Force Structure Assessment that was done in 2019. And then the future Naval Force study reduced that number a little bit. And in alternative three we get up to 80, and again that was based on our understanding of industrial capacity. But it's large surface combatants, small surface combatants to number of frigates, I don't look at any particular capability, I have to look across a task force, if you will, and how we're going to employ that force with our submarines and the dominance they have in the undersea domain with the large surface combatants, the small surface combatants, and the carrier and the carrier wing.

Senator Hirono: So do I understand you correctly Admiral that option three, of the three options you laid out, that option three gets you where you would like to be?

Vice Admiral Conn: It gets us closer to where we'd like to be.

Senator Hirono: Closer. But how realistic is that option compared to the other two options in terms of the funding that would be made available and other considerations?

Vice Admiral Conn: The fiscal certainty of that option I really can't speak to right now. I can say that in terms of where we are today, the answer would be no. But again, this is starting growth, per the shipbuilding plan, in 2028 and out in order to get to the whether it be three DDGs per year, three frigates per year, three submarines per year, getting us to an SSN(X) by the 2040s. All that, I will say, there is some uncertainty in that path forward.

Senator Hirono: Thank you.

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