Plan to fund Ohio-class replacement sub reaches tipping point

Jon Harper, National Defense Magazine
Aug 2015

Update: This story has been updated to include a Navy statement regarding a Defense Department Inspector General review of Adm. Richardson's remarks.

Political drama surrounds the Navy’s Ohio replacement submarine, as the service tries to secure funding for its highest priority program.
Much hangs on the outcome of the high stakes budget battle playing out in Washington, D.C., which will shape the future of Navy shipbuilding and potentially have major effects on the other services and the industrial base.
A key issue in question is how to pay for the next generation of ballistic missile submarines — known as the SSBN(X) or the Ohio replacement — which the Navy says are needed to replace the aging Ohio-class vessels currently in service.
“The Navy is going to buy the Ohio replacement,” said Bryan Clark, a naval expert at the Center for Strategic and Budgetary Assessments. “The nation is not going to accept the Navy not building a new ballistic missile submarine.”
Ballistic missile submarines — nicknamed “boomers” — are the centerpiece of the nation’s nuclear deterrent.
Moving stealthily undersea, they are considered the most survivable leg of the nuclear triad. By 2018, when the U.S. military adjusts to the terms of the New START treaty, submarines will carry about 70 percent of America’s deployed nuclear arsenal, according to Navy officials.
But the Ohio-class boats that carry the missiles will begin reaching the end of their service lives in 2027, with the final one scheduled to retire in 2040. The Navy hopes to start procuring the Ohio replacement in 2021, and ultimately buy 12 of them to replace the 14 Ohio-class ships. 
But building a dozen SSBN(X)s will be enormously expensive. In a March report, the Government Accountability Office estimated the total cost of the Ohio replacement to be $96 billion. In December the Congressional Budget Office came up with an even higher estimate, putting the total price tag at $102 billion to $107 billion, depending on R&D expenditures.
The Navy is expected to spend about $10 billion over the next five years on development and advance procurement even before the first ship is built, according to the Pentagon’s future years defense program.
Navy officials have rejected suggestions that the service could build fewer than 12 Ohio replacements in order to save money.
“Anything below the current authorized number of boats for the Ohio replacement will prevent us from meeting our national commitment requirements. We simply can’t do it,” Vice Adm. Terry Benedict, the Navy’s director of strategic systems programs, said at a breakfast discussion in Washington, D.C., in June.
Defense analysts said that no consideration is being given to nixing the SSBN(X), despite its price. Mackenzie Eaglen, a defense analyst at the American Enterprise Institute, said Congress supports the idea of building a new class of boomers.
“There’s no question [on the Hill about] whether we need the Ohio-class replacement,” she said. “Nobody says, ‘Why do we need this nuclear submarine?’”
The big disagreement is over how to pay for it. 
If the service is to fully carry out its 30-year shipbuilding plan, analysts estimate that the Navy would need an additional $4 billion to $7 billion per year over historical funding levels during the 15-year period when the SSBN(X) is being procured. Without the additional money, the Ohio replacement program would likely crowd out spending on other key vessels, such as the Virginia-class attack submarine, the Arleigh Burke-class destroyer or even the Ford-class aircraft carrier.
One potential scenario outlined by the CBO would see two aircraft carriers, 17 attack submarines, 20 destroyers, 19 littoral combat ships and six amphibious ships cut from the Navy’s projected fleet to compensate for SSBN(X) costs.
“The Ohio replacement program, if funded through the Navy’s shipbuilding account, could make it considerably more difficult for the Navy to procure other kinds of ships in desired numbers, unless the shipbuilding account were increased to accommodate the additional funding needs of the Ohio replacement program,” the Congressional Research Service said in a March report.
Senior Navy officials have said that it would be “unacceptable” for other shipbuilding programs to get derailed.
“What the Navy needs to be thinking about — and is starting to think about — is how do they protect those other ships?” Clark said.
Some lawmakers and Navy officials are hoping to at least partially fund the Ohio replacement program through a special defense-wide account separate from the regular shipbuilding budget. In the fiscal year 2015 National Defense Authorization Act, Congress created a National Sea-Based Deterrence Fund for this purpose, but lawmakers have clashed over whether any money should be put into it.
In the fiscal year 2016 National Defense Authorization Act, the House Armed Services Committee authorized $1.4 billion for research, development, testing and evaluation of the SSBN(X). But the House Appropriations Committee voted to prohibit putting any money into the deterrence fund. 
The matter came to a head before the full House in June, when the fund’s supporters tried to override the appropriations committee and proposed a legislative amendment to have the funding restored.
“This [fund] makes sure that down the road we are not forced to choose between building a replacement ballistic missile submarine or a destroyer or an aircraft carrier,” Rep. Rob Wittman, R-Va., said during a House debate on the issue.
Critics of the fund said it would unfairly take money away from other Defense Department organizations.
“If the president determines the Ohio-class replacement is a must-fund platform, then the Navy should buy it, just as it has every other submarine in its inventory that our committee has supported. Establishing a special fund to pay for the submarine is an attempt to have other military services pay for what is a Navy responsibility,” said Rep. Rodney Frelinghuysen, R-N.J., during the House debate.
Eaglen, who thinks using a defense-wide deterrence fund is the wrong approach, said it is hard to weigh the programmatic tradeoffs at this point.
“It’s very unclear where this money is coming from within Defense and what other priorities are going to suffer as a result,” she said.
In the House, supporters of the deterrence fund prevailed and were able to get the $1.4 billion restored by a vote of 321-111.
The Senate version of the NDAA also authorized $1.4 billion for RDT&E on the SSBN(X), but the legislative body has yet to pass its fiscal year 2016 appropriations bill.
How things will shake out in the coming years is anyone’s guess.
Clark anticipates that the Navy will receive additional money for shipbuilding, but not at much as it wants.
“I also believe that the Congress will be able to put some money into the sea-based deterrent fund,” he said. “It will provide some money to help defray the cost of the Ohio replacement. … It won’t be enough to cover it but it will help.”
Eaglen said the Navy has historically been effective at making its case for obtaining more money for shipbuilding, which gives the service an advantage when the budget pie is divvied up.
“Political savviness brings you budget dollars,” Eaglen said. “I think the Navy and Marine Corps … are the most effective of all the services at their self-lobbying and self-promotion. … They [Navy officials] spend a lot of time educating people on why a strong Navy is good for the country.”
The Project on Government Oversight, a watchdog group, has accused high-ranking Navy officials of overstepping the line in trying to secure funding for the SSBN(X) at a Naval Submarine League symposium in October. 
“We have not yet figured out how we will pay for Ohio replacement, and we should take no comfort on the general commitment that ‘we’ll get this done,’” said Director of Naval Reactors Adm. John Richardson at the symposium last fall, according to a published transcript of his remarks. 
“Increase support. Inform those in your sphere of influence — everyone from your congressmen to your local PTA. Look for ways to make people aware of how vital this is to the nation’s security. The stakes are extremely high. … We all need to do it,” he told attendees.
Rear Adm. Joe Tofalo, the Navy director of undersea warfare, offered his assistance to those at the symposium.
“If anybody needs help in strategic messaging, then you call … and let us know,” he said, according to the transcript. “If you need trifolds, priorities briefs, talking points for your congressman, we are more than happy to support you.”
Danielle Brian, the executive director of POGO, sent a letter in June to the Government Accountability Office expressing concerns that Richardson and Tofalo “spent taxpayer money on publicity or propaganda to engage in grassroots lobbying on the proposed procurement of the Ohio replacement program … and the creation of a separate sea-based deterrence fund to pay for it.”
In an email to National Defense, GAO spokesman Chuck Young said, “GAO issues legal opinions … but not at the request of the general public. However, GAO is reviewing the letter to determine appropriate action or the entity to whom it should be properly referred.”
POGO sent a similar letter to Sen. John McCain, R-Ariz., the chairman of the Senate Armed Services Committee. 
"To ensure that Adm. Richardson's comments were within appropriate Department of Defense (DoD) and civil guidelines, the Navy requested the DoD Inspector General review his remarks and provide feedback at the earliest opportunity. That process, which concluded today, found no wrong doing on the part Adm. Richardson," Navy Chief of Information Rear Adm. Dawn Cutler said in a July 21 statement.
Richardson has been nominated to be the next chief of naval operations — the service’s top post — while Tofalo has been tapped to be the next commander of naval submarine forces. McCain’s office did not respond to questions about whether the accusations would affect the senator’s decision to confirm the two officers when his committee considers their nominations.
If the Navy doesn’t receive the extra money it needs for shipbuilding, it could have major strategic and industrial consequences, according to defense analysts.
Clark said the Navy could compensate for a smaller fleet by basing more ships overseas, but that would not fully mitigate the problem.
“You might not have very many ships back in CONUS [the continental United States] that would be able to surge … against a larger adversary like a China or a Russia,” he said. “If you wanted to start increasing the number of ships that are present in an effort to manage an escalating crisis, you may not be able to do that as easily. So there would be a deterrence impact from this smaller fleet.”
Overworking a smaller fleet could create a vicious cycle by increasing the amount of time that ships need to spend in maintenance, he said.
“You can get into kind of a death spiral. If the fleet gets to a small enough point and the demands don’t go down you will end up with a fleet that continues to shrink,” he said.
Buying fewer ships or extending procurement timelines would damage the industrial base, analysts said.
“The industrial base will be hit pretty dramatically because if they go down to building only one destroyer a year and one submarine a year to use the money to pay for the Ohio replacement … and then amphibious ships are reduced dramatically, that’s going to affect specific shipyards,” Clark said. 
He cited Ingalls Shipbuilding in Pascagoula, Mississippi, and Bath Ironworks in Bath, Maine, as particularly vulnerable because of the types of ships they produce.
 “You could probably manage it so none of them go under outright. But you would end up spending more money per ship because you will end up … [with] this very inefficient construction cycle where you’ve got parts of the shipyard that are idle unnecessarily. So you’ll end up paying more per ship and then you will also end up with the shipyards not being able to make the kinds of investment to improve productivity or to incorporate new technologies,” he said.
Perhaps the biggest long-term blow would be to the shipbuilding workforce, experts said, because a lot of highly skilled workers could potentially lose their jobs if there is not enough work to keep them around.
“It will be difficult for the shipyards to get them back” after they find new jobs, Clark said. “It’s the human part that really affects you. The human capital is pretty valuable in the shipbuilding business.”
Andrew Hunter, a defense industrial base expert at the Center for Strategic and International Studies, said a major cutback in shipyard work could cost “thousands” of jobs. That is something that lawmakers from major shipbuilding states want to avoid.
“There is a very clear reason why, as a result of their constituencies, that these [Navy funding] issues are a top level of concern for them,” Hunter said.