From the House Armed Services Subcommittee on Readiness hearing last week.FORBES: Ms. Bordallo, I recognize you for whatever time you require.$165 a barrel? Yep, and while I am not certain, I believe $344 million is just the Navy/Marine Corps budget shortfall to meet the higher price. I could be mistaken, but I thought I read somewhere the total DoD shortfall due to rising prices of fuel is $517 million. Regardless, the $165 a barrel number is important. Tell me folks, which direction is energy heading in the future... up or down?
BORDALLO: Thank you. Thank you very much, Mr. Chairman. There are a few miscellaneous questions for the admiral. Admiral Burke, it is my understanding that the DOD rates for fuel increased on June 1st from $126 a barrel to $165 a barrel. Can you please explain the total cost and the impact to the ship operations and flying hour program accounts? And if the fuel rates remain high in fiscal year 2012, how will you pay for that deficit?
BURKE: Ma'am, you're absolutely right. It's roughly $39 a barrel. In the last four months of 2011, if that price holds, it will cost us an additional $140 million in the ship operating account, an additional $204 million in the flying hour account, for a total of $344 million through the rest of the fiscal year. The likely source of payment for that will be supplemental funding.
From Navy Nuclear-Powered Surface Ships: Background, Issues, and Options for Congress by Ronald O'Rourke, Specialist in Naval Affairs dated January 18, 2011.
2006 Navy Alternative Propulsion StudyCRS sourced that information to the written statement by The Honorable Dr. Delores M. Etter, Assistant Secretary of the Navy (Research, Development and Acquisition), et al., Before the Seapower and Expeditionary Forces Subcommittee of the House Armed Services Committee on Integrated Nuclear Power Systems for Future Naval Surface Combatants, March 1, 2007, pp. 4-5.
The more comprehensive and detailed 2006 Navy alternative propulsion study was conducted in response to Section 130 of the FY2006 defense authorization act (H.R. 1815, P.L. 109-163 of January 6, 2024), which called for such a study (see “Prior-Year Legislative Activity”). The study reached a number of conclusions, including the following:
In constant FY2007 dollars, building a Navy surface combatant or amphibious ship with nuclear power rather than conventional power would add roughly $600 million to $800 million to its procurement cost.
For a small surface combatant, the procurement-cost increase was about $600 million.
For a medium-size combatant (defined as a ship with a displacement between 21,000 metric tons and 26,000 metric tons), the increase was about $600 million to about $700 million.
For an amphibious ship, the increase was about $800 million.
Although nuclear-powered ships have higher procurement costs than conventionally powered ships, they have lower operating and support costs when fuel costs are taken into account.
A ship’s operational tempo and resulting level of energy use significantly influences the life-cycle cost break-even analysis. The higher the operational tempo and resulting level of energy use assumed for the ship, lower the cost of crude oil needed to break even on a life-cycle cost basis, and the more competitive nuclear power becomes in terms of total life-cycle cost.
The newly calculated life-cycle cost break-even cost-ranges, which supercede the break-even cost figures from the 2005 NR quick look analysis, are as follows:
Although nuclear-powered ships have higher procurement costs than conventionally powered ships, they have lower operating and support costs when fuel costs are taken into account.
A ship’s operational tempo and resulting level of energy use significantly influences the life-cycle cost break-even analysis. The higher the operational tempo and resulting level of energy use assumed for the ship, lower the cost of crude oil needed to break even on a life-cycle cost basis, and the more competitive nuclear power becomes in terms of total life-cycle cost.
The newly calculated life-cycle cost break-even cost-ranges, which supercede the break-even cost figures from the 2005 NR quick look analysis, are as follows:The life-cycle cost break-even analysis indicates that nuclear-power should be
- $210 per barrel to $670 per barrel for a small surface combatant;
- $70 per barrel to $225 per barrel for a medium-size surface combatant; and
- $210 per barrel to $290 per barrel for an amphibious ship. In each case, the
- lower dollar figure is for a high ship operating tempo, and the higher dollar figure
- is for a low ship operating tempo.
considered for near-term applications for medium-size surface combatants, and
that life-cycle cost will not drive the selection of nuclear power for small surface
combatants or amphibious ships. A nuclear-powered medium-size surface
combatant is the most likely of the three ship types studied to prove economical,
depending on the operating tempo that the ship actually experiences over its
lifetime.
Compared to conventionally powered ships, nuclear-powered ships have
advantages in terms of both time needed to surge to a distant theater of operation
for a contingency, and operational presence (time on station) in the theater of
operation.
I think this is very interesting, because in 2011 - roughly a dozen years away from commissioning the first DDG-51 Flight III in a time everyone is talking about shrinking budgets and high operational tempos, all of a sudden the price of DoD fuel is now around 75% of the breakeven point for nuclear powered surface combatants with a high operational tempo. By the way, when you add nuclear power to surface combatants, it raises the price of those ships meaning Congress is likely to buy fewer ships - and at a high price already the Navy is going to have fewer ships anyway which also means it is very likely the operational tempo would remain very high.
The Navy has a serious energy problem, and it isn't just fuel. The question that everyone needs to be asking is "what should we be doing now?" It depends. If the Navy is serious about total cost of ownership when it comes to their new construction vessels, then the law that requires nuclear power must be part of the discussion. Alternatives to nuclear power should also be important parts of the discussion, after all there is something to say about not putting a nuclear reactor on a platform the enemy will be shooting at - although given we already have nuclear aircraft carriers, perhaps that ship has sailed.
No matter how one looks at it, any discussion of the DDG-51 Flight III must include an explanation why the price of oil will not go up only 25% more than the price of oil today, which by itself is an unbelievable proposition because any war requiring the United States to use the capabilities of the DDG-51 Flight III is almost certainly going to raise the price of oil by 25%! The issue I'm trying to highlight is that the rising cost of fuel must factor into the DDG-51 Flight III discussion, because we appear to be well past the red line for a legitimate nuclear power discussion for any platform that won't be fielded 10 years from today.
If total cost of ownership matters the way the Navy says it does, then it is time to start thinking about designing a future surface combatant that factors in total cost of ownership. The law today states new design ships the size of modern US surface combatants must be nuclear powered. I cannot say I have always agreed with that law, but in light of new information I think there was quite a bit of wisdom in the law and the Navy can no longer ignore nuclear issue when it comes to the next surface combatant. Besides, the necessity for Integrated Power in future surface combatants is an issue that makes the current plan for Burke Flight IIIs completely unrealistic anyway. Indeed, Congress should never fund a future surface combatant program that lacks integrated power, to do so would be a criminal act in the form of wasting taxpayer investments in seapower.
With all of that said, Congress cannot ignore that by buying nuclear surface combatants, they are budgeting cost of ownership for fuel up front in procurement - an upfront investment that suggests a transition period requiring higher investment up front for lower operational costs later. This is very important, because while it is unclear if the Navy has the foresight to make choices based on long term total cost of ownership investments - that concern regarding lack of foresight goes double for political leaders.
BORDALLO: Another question is, given the issues with the current computer-based training raised by GAO, the naval inspector general and the Balisle report, how has the Navy improved off-ship training for Navy personnel to ensure that sailors arrive at the ship with the necessary skills?Shortly after the commissioning of USS New York (LPD 21), the ship was returning to Norfolk when all of a sudden there was this loud tapping sound coming from the main propulsion diesel engine. It turned out, nobody knew what to do. This scenario was apparently not covered in the virtual training program the crew had used to operate those big diesel engines in the LPD-17 class. The crew was supposed to turn off the engine having the problem, but that's easier said in hindsight.
BURKE: Ma'am, we probably went a little too far on computer based training a few years ago. We have since shifted the pendulum back some, so we have a mix of computer-based training and as well as instructor-based training. And we have a very good instructor-to- student ratio in that instructor-based training. And we see benefits in both kinds of training, because there are some people that learn better one way than the other and there are some things that are better taught one way than the other. But the key point is it's much better to take apart a valve and put it back together in something, you know, where you actually put your hands on a physical valve and physically work on something. So we shifted too far. We've come back. And we think we've got the mix about right now. But we've heard from the sailors and heard from the Congress on this one and we've moved.
The Navy has spent a fortune retraining sailors because of poor training given in the name of virtual instruction. Time will tell if the Navy has found the right balance between hands-on training and simulated training, but there is no question the Navy has taken a lot of strides to fix what was an enormous mistake in reliance on computer based simulation.
Of all the mistakes the Navy has made recently regarding their attempt to find efficiency in technology, the virtual training mistakes might be one I'm OK with as long as the lesson is legitimately learned. For a generation or two at least, my sense is that the Navy heaped upon itself a healthy dose of skepticism regarding the false promises of technology as a replacement for fundamental skills sailors require. It's an expensive lesson to learn, but one we are unlikely to see repeated. Large private organizations make these kinds of mistakes too, so the Navy is not unique when making mistakes attempting to incorporate new technological concepts into their organization.
As mistakes go, this was a big one, but in the case of too much reliance on virtual training - it is a problem that has been relatively easy to identify and has a known and easily applied solution. The Navy deserves all criticism for this mistake, but for me - I'm far more concerned with organizational problems that are hard to identify or don't have a known solution yet, for example, new surface force maintenance shore based support concepts. For me, integrating new support regimes for new ship types is a much bigger challenge than a virtual training software program that never lived up to expectations.
BORDALLO: Good. My last question, Mr. Chairman, is, based on the findings of the Balisle report, the Navy plans to take a number of actions in many interrelated areas such as training, maintenance, command and control, manning, etc. What's not clear, however, is who will be responsible for making sure that the actions are coordinated and implemented to avoid the problems of the past where the Navy wasn't looking at things holistically to see whether the changes it was making were compatible and did not have unintended consequences. The Navy will need to make accountability clear and have some kind of integration mechanism across the areas, whether it be one senior-level official who is the focal point supported by an interdisciplinary group or another approach. So how does the Navy intend to proceed from here in taking corrective actions, including establishing leadership and organizational accountability?Who is accountable? HE IS! Wouldn't it be nice if a ships CO could pass the responsibility on to the squadron commodore? I get it that there is a chain of command, but at some point every one in the chain has to take personal responsibility for what they are doing. McCoy and Burke were thrown slow fastballs over the center of the plate, and passed up the opportunity to swing.
BURKE: Last summer, last July, I think it was, in front of this committee, Admiral McCoy and I were here in between us was Admiral Harvey. And Admiral Harvey was and is the commander at Fleet Forces down in Norfolk. Admiral Harvey said he was the responsible person to do exactly what you talked about. Now, he can't do that without Admiral McCoy and Admiral Architzel and me doing our jobs to support him. So in military parlance we see him as the supported commander and we are the supporting commanders. And as long as we do our jobs to give him the resources to do it, he will -- he will deliver.
BORDALLO: So he is the focal point.
BURKE: Yes, ma'am.
MCCOY: And if I could chime in, I'm on a regular every 60 to 90 day drum beat with Admiral Harvey. I also report to Admiral Walsh, the Pacific Fleet commander. I'm responsible to deliver the engineering and maintenance associated with the actions in the Balisle report. I can also tell you that the two surface type commanders are also held accountable by the fleet, Admiral Harvey and Admiral Walsh, for their pieces of manning, training and standards and things like that that were in the Balisle report. So we are on a regular drum beat. And so I think that's moving and being well cared for.
BORDALLO: Thank you very much. And I thank you both for service to our country. I yield back.
FORBES: Thank you, Madeleine.
I think it says a lot when the question of accountability is raised and leaders quickly point fingers in the direction of others. VADM McCoy's answer is slightly better, but still, I think the questions of accountability and the perception regarding what it means in the Navy only gets more murky when the shore based leadership is ready to fill the accountability void with the names of others under oath. Ms. Bordallo is right to ask about organizational accountability, because the problem is bigger than one person, even if both Vice Admirals are suggesting otherwise by pointing to one person.
Don't get me wrong, I agree ADM Harvey is the senior-level official responsible for coordinating everyone else, but "everyone else" includes both of these Vice Admirals they should have stepped up, but didn't.
I was impressed when Admiral Harvey took personal responsibility on under oath last year, but what I don't understand is how VADM McCoy can suggest that the accountability for this falls to one person - the Commander of Fleet Forces Command - when in fact Admiral Greenert was the Commander at Fleet Forces Command before ADM Harvey. Admiral Greenert's record is that he ran around apparently oblivious to readiness problems including the funding shortfalls for surface combatants claiming "we have plenty of money." How is it possible Fleet Forces Command is accountable today when Fleet Forces Command is not being held accountable for past activities when a promotion to CNO for Admiral Greenert is the reward for not getting on top of this issue a few years ago?
Ms. Bordallo, allow me to humbly suggest the answer to your question is exactly as the Navy testified - accountability only exists if your name is Admiral Harvey who, on his own, was willing to take responsibility for the problems himself.
And that is the problem sure to be ignored by the Senate come the CNO hearings, meaning Congress should expect the same low standards of accountability from the Navy because it is the standard they set with their low standards of accountability when it comes to oversight via the promotion system. Ironically, as COs get fired with increased frequency the Navy is rightfully being praised for holding commanding officers to high standards of accountability, but when someone like me questions the job performance of any Admiral, folks get real defensive fast and generally start naming the non-Admirals to shift blame.
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