Budget Focus: DDG-51 Reveals Unreasonable Expectations

It is very difficult to tell looking at a budget what exactly the Navy is thinking, but the nice thing about a budget is that it gives us some idea what the Navy wants to do. The DDG-51 restart has had a number of questions surrounding it that have previously had few answers in public. There has been a lot of speculation, and the PowerPoints can sometimes look very rosy, but the details of what is happening are often far and few.

Based on conversations with folks in San Diego last month and now looking at the Navy budget, it appears we can get some idea what is coming with the DDG-51 restart. As you know, when the DDG-1000 came around the final number of the DDG-51 was 62, but with the restart I believe we can safely put that number at 65, 72, or 75 with room to grow depending upon how one looks at it.

According to the FY 2012 budget, the Navy will issue contracts for 2 DDG-51s in April of this year, one for Ingalls Shipbuilding and one for Bath Iron Works. These two DDG-51s are the two that are yet to be funded in FY 2011 (DDG-114 and DDG-115). What is unclear is when we might see the contract for DDG-113, which in the budget the contract issue date is listed as TBD but the budget also mentions negotiations should conclude in the Spring of 2011.

There are several budget items that cover the inclusion of Ballistic Missile Defense in DDG-113 making that ship the primary vessel for the integration of Advanced Capability Build 12 certification for new construction DDG-51s, integration that is expected to be concluded by the Q2 of 2016. That would be just before the two FY 2011 ships are expected to be delivered in August of 2016, assuming all goes well with the restart.

So what do we make of this? There are two ways to read it and I am not 100% sure which is correct.

Potential Option #1
Just as the LCS program had 4 ships before a block buy contract was signed to build 20 ships, the DDG-51 program is going to restart the program with three ships purchased on individual contracts before a block buy is issued for 10 ships funded between FY 2012 - FY 2017. That means we can expect the 3 DDG-51s funded in FY 2010 and FY 2011 to be very expensive, accounting for the 5 year pause in construction at the shipyards, but the 10 additional DDG-51s to come in at a much more reasonable, negotiated price.

Potential Option #2
But there are still a lot of questions, or perhaps I should say I'm not quite sure I am reading this correctly. From the FY 2012 Budget Highlights Book (PDF).

Air and Missile Defense Radar (AMDR)
The budget requests $167 million to complete the Air and Missile Defense Radar’s Technology Development phase in FY 2012 in preparation for Milestone B in the first quarter of FY 2013. The radar is an open-architecture solution to the requirement for Ballistic Missile Defense, while also improving the DDG-51 class air defense capabilities. AMDR is envisioned to go on the FY 2016 DDG Flight III ship.

From what I understood based on Undersecretary Work's comments in San Diego, the Navy desires and will seek Congressional approval for a negotiated block buy contract for 10 destroyers, but maybe I misunderstood which ten destroyers he was talking about.

Complicating the issue, Undersecretary Work specifically said the block buy would include AMDR, but maybe he was just being hopeful? Based on that paragraph in the Highlights Book, the block buy could be the 10 DDG-51s funded between FY 2010 - FY 2015, and the DDG-51 Flight III that includes the AMDR begins in FY 2016 with that one ship and continues in FY 2017 with two ships into a multi-year into the future?

I do not believe the FY 2010 or FY 2011 ships are in the multi-year plans though.

This is what I think the Navy is going to try to do... The Navy is going to try to negotiate a block purchase of 10 DDG-51s from FY 2012 - FY 2017 but include in that negotiation the AMDR and Flight III start for the last three ships of that multi-year beginning in FY 2016. Sean Stackley has proven he can do amazing things, but when considering the redesign for cooling, power, etc... necessary for the Flight IIIs, I just can't see the industry going for that.

So instead of potential options, lets look at more realistic scenarios.

Realistic Scenario #1
The Navy is going to issue contracts for the FY 2010 DDG-51 (DDG-113) this spring, and issue contracts for the two FY 2011 DDG-51s in April 2011 - assuming the FY 2011 budget gets passed in time. The Navy will then ask Congress to approve a multi-year purchase option for FY 2012 - FY 2015 of seven additional ships, bringing the total number of DDG-51s to 72. Beginning in FY 2016 the Navy will fund the first DDG-51 Flight III hull that includes AMDR, and will fund two more Flight III hulls in FY 2017. We will likely see a block purchase of Flight IIIs with the AMDR begin in FY 2018, even if the Navy desires otherwise.

There are several R&D budget items that focus on improving the DDG-51 Flight III ships, everything from hybrid drive technologies to integrating new weapon systems. I do not know how much the Flight III will grow to accommodate the AMDR and associated cooling, power, etc... necessary to make the Flight III capable, but I do note the budget does appear to reflect about 25% additional funding per hull for the DDG-51 Flight IIIs beginning in FY 2016. Is it optimistic of the Navy to assume the first Block III destroyer will cost $2.5 billion, while the second and third Flight IIIs will cost an average of $2.2 billion? It is unclear, because the final design of the Flight IIIs is still very unclear.

Some Final Thoughts

The DDG-51 is going to be looked back in history the greatest warship class ever in it's era, surpassing even the Iowa class battleships, and potentially any era if new Flights are capable of staying viable. To put the DDG-51 class in context, the ship will reign as the most capable design with the most combat capability from a period beginning in 1991 and extending ahead for at least the next few decades, and the DDG-51 Flight IIIs funded in FY 2017 will not be due for retirement until around 2062. Based on current plans, the DDG-51 will serve longer than the Iowa class battleships. If the DDG-51 Flight IIIs are funded for ten years, say between FY 2016 - FY 2025, for example - when the last of the Flight IIIs are delivered into service in 2030 they would be expected to serve until 2070.

Thought about another way, the DDG-51 is expected to serve the US Navy on the front lines as a major ship of the battle line for at least 71 years, and who knows how many more depending upon how many years the US Navy builds the Flight IIIs after FY 2017. In the context of history, we have to go back to the age of sail to find equivalency, and it would mean the USS Constitution would have been expected to be a front line vessel during the Civil War instead of a training ship. Is the Navy being too optimistic with the Flight IIIs? In my opinion, the Flight IIIs must include all-electric engineering or those ships will never be capable of serving their full service lives as a viable first rate ship of the battle line.

I note the Navy did not include a 30-year plan in any of the budget items, so it is hard to see what comes after FY 2017 for the DDG-51 program. Based on everything we are seeing and hearing as it concerns finances, the Navy's shipbuilding plan for the next 5 years is very optimistic, entirely reliant on everything working out perfectly including favorable contracts negotiated over multiple years (which still requires Congressional approval), not to mention an expectation that the budget is not reduced in any future years but instead flat lines to no growth except with inflation. The optimistic budget condition is very hard to believe when it comes to major surface combatants because the Navy cannot afford even 2 DDGs a year this decade which is necessary to sustain 2 shipyards, and next decade the shipbuilding budget will also be struggling to fund SSBN(X) replacements.

Based on my study of the FY 2012 budget, I have a hard time seeing the optimism the Navy is expressing regarding the state of their shipbuilding plans, in fact I don't see it at all. The Navy appears to legitimately be at the Tipping Point and is ignoring this reality, or they have some secret Plan B yet to be revealed that goes well beyond simply hoping to get more favorable contracts.

The only Plan B option I see even possible is if the Navy can somehow muster the necessary leadership in uniform as the next CNO who can advocate a higher percentage of the DoD budget from the other services. I do believe the American people, tired of funding and supporting land wars in foreign lands, is primed to listen to such arguments if an alternative vision is articulated well. I would love to be wrong, but if the next CNO is the guy everyone believes it is going to be, the Navy is already at the Tipping Point and this budget is going to be seen in hindsight as laughable.

I hate to play the role of Captain Obvious, but we live in an era of communications and the favorite son expected by OPNAV as the next CNO is a smart guy, but being smart isn't enough. In today's environment, smart by itself is a standard that is parochial enough to insure that in a communication era the Navy doesn't get the support they believe they need from the American taxpayer to sustain their vision, because the vision will never be articulated well enough to be seen by anyone outside the Navy. If the next CNO isn't a spokesman capable of connecting when communicating the necessity of a strong Navy to Congress and the American taxpayer, the vision expressed in the Navy's FY 2012 budget is dead on arrival, and it is time to accept the Tipping Point reality.