BUDGET SHORTFALL FOR NAVY (Senate - January 28, 1994)

[Page: S385]

[Begin insert] Mr. D'AMATO. Mr. President, at a recent press conference, Chief of Naval Operations, Adm. Frank Kelso, indicated that the Navy faced a $3.6 billion budget shortfall between fiscal year 1995-99. The admiral, according to a story that appeared in Navy News & Undersea Technology, anticipated that the shortfall would likely force the `accelerated retirement of older ships and aircraft, the consolidation of training, elimination of the Navy's `Aggressor squadron,' reduced operations for aircraft carrier antisubmarine helicopters, regionalizing maintenance functions, moving ships maintenance from tenders to shoreside facilities, and dropping the number of tenders to 4 from 13.'

There is an easier way. It cannot have been lost on Admiral Kelso that the $3.6 billion shortfall between fiscal year 1995-99 equals almost exactly the $3.4 billion price tag of the CVN-76. Eliminate the CVN-76, and your budget problem disappears.

Obviously, this proposal will spark much wailing and gnashing of teeth within the navy and here in Congress, but it is time to ask ourselves whether we need another 90,000-ton, 5,000-man behemoth when the Navy budget is in chaos.

We are already gapping presence in forward areas. One less carrier will not profoundly change the balance of power in any given region. Frankly, if we reduced our presence in the Indian Ocean, the real driver of deployments, we could probably increase presence elsewhere. Face it, Saudi Arabia is one huge aircraft carrier with an infrastructure second to none. Carriers are intended to provide airpower outside the range of available land bases, but the Persian Gulf appears to be the one region of the world where carriers are least necessary.

And what of the industrial base? The Navy needs to separate jobs programs from preserving critical industries, skills, and tooling. Nuclear propulsion, catapults and arresting gear, and whatever else is unique to carriers may require special attention, but not to the point of justifying yet another Nimitz-class carrier. If the work force at Newport News needs to be preserved, run the America through a Service Life Extension Program. In the meantime, get Newport News and Navy designers cracking on the next generation of aircraft carriers capable of handling a mix of conventional and short take-off and landing aircraft.

To survive the current fiscal austerity, bold moves are required. The `salami slice' approach to savings outlined by Admiral Kelso is the wrong way to go. Even if every initiative enumerated had merit, and I would argue that not all do, and achieved the saving projected, it is unlikely that the Navy would be able to close the gap between funding and requirements.

We can either denude the seas of ships and ships of planes and helicopters, monkey with training and maintenance, and reduce procurement rates to the point where unit costs explode or we can eliminate the CVN-76. The choice is simple.

I ask that the article, `Budget Squeeze Brings Howls,' be included in the Record.

The article follows:

From Navy News & Undersea Technology, Jan. 2, 1994


Budget Squeeze Brings Howls

It is probably no coincidence that three hours before Defense Secretary nominee Bobby Inman bowed out--citing among other reasons a budgetary disconnect between future budgets and force levels--the Chief of Naval Operations was making the same point.

Adm. Frank Kelso told a press briefing the proposed Navy budgets for fiscal years 1995 to 1999 will leave the service about $3.5 billion short in two critical procurement acounts--shipbuilding and naval aviation.

Kelso indicated the shipbuilding budget over the five years will average $6.3 billion per year while the requirements to maintain the force levels outlined in DOD's Bottom-Up Review demands $8.4 billion.

Kelso broke out the shortfall:

[Billions of dollars]
              Fiscal year 1995-99 average Future requirements 
DDG-51                               $2.7                $2.5 
CVN/refueling                         1.2                 2.0 
SSN                                   1.2                 2.2 
Amphibs                               1.0                  .7 
Other                                  .2                 1.0 
Totals                                6.3                 8.4 

For aviation, the mismatch is $1.5 billion per year, and is dominated by the need for more F-18 aircraft, as follows:

[Billions of dollars]
                 Fiscal year 1995-99 average Future requirements 
F-18C/D/E/F                             $2.2                $3.1 
CV & SPPT                                 .9                  .5 
USN & USMC helos                          .1                  .3 
AV-8B                                     .3                     
V-22                                      .6                 1.0 
JAST                                                          .6 
APN 5/6/7                                2.9                 3.0 
Totals                                   7.0                 8.5 

The APN (aircraft procurement, Navy) 5/6/7 account includes modifications, spares and support. For the past three years, it has run about $2.5 billion annually.

The Navy will attempt to make up for the perceived shortfall by continuing its `recapitalization' strategy of cutting infrastructure and reducing force levels. Kelso also said the Navy will be an aggressive player in the next round of base closings set for next year.

Kelso admitted the recapitalization is not without risk. Base closure could be throttled back due to political considerations, or its costs might be underestimated. New programs could `suffer from unanticipated inflation,' while the impact of a declining industrial base could force costs to rise.

Other threats to the Navy plan include the potential for a higher operational tempo, causing problems in retaining qualified sailors, or what Kelso called `DBOF turmoil.' The Defense Business Operating Fund--established in 1991 to buy services and commodities not included as budget line items--has caused multi-billion dollar headaches for the Navy (Navy News, 4/26/1993).

The final and worst-case threat to matching Navy finances and force structure is increased military tension in the world.

Kelso cited several on-going ways the Navy is looking at to reduce expenditures, including the accelerated retirement of older ships and aircraft, the consolidation of training, elimination of the Navy's `Aggressor squadron,' reduced operations for aircraft carrier anti-submarine helicopters, regionalizing maintenance functions, moving ship maintenance from tenders to shoreside facilities, and dropping the number of tenders to four from 13.

It is uncommon for the Navy's ranking officer to make critical on-the-record comments concerning his upcoming budget submission. That Kelso was willing to `go public' might indicate he believes lame-duck Defense Secretary Les Aspin--who resigned for the same budget/forces mismatch that Inman cited--has abandoned the fight for enough money to achieve the force levels outlined in the Bottom-Up Review.[End insert]