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Summary

The Navy in FY2005 wants to finish procuring Arleigh Burke (DDG-51) class destroyers and begin procuring two new classes of surface combatants -- a new destroyer called the DD(X), and a smaller surface combatant called the Littoral Combat Ship (LCS). These objectives, if implemented, would represent the most significant shift in Navy surface combatant procurement in 20 years. The issue for Congress is whether to approve, modify, or reject the Navy's proposals. In marking up the FY2005 defense budget, the House Armed Services and Appropriations committees have recommended deferring the start of construction of the lead DD(X) beyond FY2005, while the Senate Armed Services and Appropriations committees have recommended that construction start in FY2005. The House and Senate Appropriations committees have stated that they view the first LCSs as prototypes and have recommended deferring the design and construction of follow-on LCSs until these prototypes are built and tested. The Navy wants to acquire a total of up to 24 DD(X)s at a cost of up to roughly $40 billion (using Navy cost estimates) or roughly $54 billion (using CBO cost estimates). The Navy wants to acquire a total of up to 60 LCSs at a potential cost of up to $14 billion or perhaps more. The Navy's proposals raise oversight issues for Congress concerning the surface combatant force-structure goal; mission requirements for the DD(X) and LCS; whether the DD(X) and the LCS represent the best approach for satisfying these mission requirements; the Navy's proposed acquisition strategies for the DD(X) and LCS; the potential affordability of the DD(X) and LCS programs; and the potential industrial-base implications of the DD(X) and LCS programs. Views developed on these issues can influence decisions on the DD(X) and LCS programs. Potential options for Congress for either the DD(X) or LCS programs include approving the programs as proposed by the Navy; modifying their proposed acquisition strategies; and increasing or reducing their planned procurement rates. Additional potential options for the DD(X) program include procuring a few DD(X)s as a short-term bridge to an accelerated CG(X) cruiser program currently projected to start procurement in FY2018; and terminating the DD(X) program in favor of procuring modified DDG-51s or a new-design frigate instead. Additional options for the LCS program include procuring and evaluating a few LCSs while reserving judgment on whether to build a larger number; and terminating the LCS program in favor of procuring a new-design frigate or making other kinds of investments for improving littoral-warfare capabilities. Additional options for bolstering the surface combatant industrial base include procuring one or two additional DDG-51s in FY2006, and accelerating and expanding procurement of Coast Guard cutters under the Deepwater acquisition program, and accelerating procurement of Navy amphibious assault ships. This report will be updated as events warrant.

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