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Summary

The Navy in FY2006 and future years wants to procure no more Arleigh Burke (DDG-51) class destroyers and instead wants to 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). In support of this plan, the Navy for FY2005 requested procurement funding for three final DDG-51s and initial procurement funding for the first DD(X) and the first LCS. Congress for FY2005 provided $3,445.0 million for procurement of three DDG51s. Congress also provided $350.5 million in advance procurement funding for the DD(X) program -- $221.1 million for the first DD(X), and $84.4 million for the second DD(X) -- and directed that procurement of DD(X)s be fully funded in the Navy's ship-procurement account rather than incrementally funded in the Navy's research and development account as the Navy had proposed for the first DD(X). Congress approved the Navy's plan to build the first LCS using research and development funds rather than shipbuilding funds, provided $214.7 million in procurement funding to fund the ship's entire construction cost (rather than about half the ship's cost, as the Navy had requested), required the next LCS (to be funded in FY2006) to be built to a second LCS design now being developed, prohibited the Navy from requesting funds in FY2006 to build a third LCS, and required all LCSs built after the lead ships of each design to be funded in the Navy's ship-procurement account rather than its research and development account. As part of the proposed FY2006 defense budget to be submitted to Congress in early February 2005, the Navy is expected to request additional advance procurement funding for the first DD(X) and procurement funding for the second LCS. The DD(X) and LCS programs raise several oversight issues for Congress. Potential options for Congress for the DD(X) program include approving the program as proposed by the Navy and supplementing the industrial base, if needed, with additional work; accelerating procurement of the lead DD(X) to FY2006 and the second DD(X) to FY2007; deferring procurement of the lead DD(X) to FY2008; procuring two or more DD(X)s per year; building DD(X)s at a single yard, or building each DD(X) jointly at two yards; terminating the DD(X) program now, or after procuring a single ship as a technology demonstrator, and supplementing the industrial base with additional work until the start of CG(X) cruiser procurement, and starting design work now on a smaller, less expensive alternative to the DD(X) and procuring this new design, rather than DD(X)s or CG(X)s, starting around FY2011. Options for Congress on the LCS program include shifting procurement funding for LCS mission modules to the Navy's ship-procurement account; procuring a few LCSs and then evaluating them before deciding whether to put the LCS into larger-scale series production; procuring LCSs at a rate of up to 10 per year; procuring LCSs at a rate of less than 5 per year; terminating the LCS program and instead procuring a new-design frigate; and terminating the LCS program and investing more in other littoral-warfare improvements.

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