Shipbuilding plan sailing into turbulent seas.

• Author: Erwin, Sandra I.
• Position: NAVY

CUTBACKS IN PERSONNEL, TRAINING and maintenance costs will fuel a moderate growth in Navy procurement programs starting in 2008, albeit at a slower pace than Navy leaders had forecast a year ago, analysts estimate.

The Navy had projected its 2007 budget of $127 billion would increase by 18 percent in 2008, but that is most probably "not achievable" unless the service trims more people from the force and slashes spending on weapon maintenance and operations, says James A. McAleese, defense industry analyst and attorney at McAleese & Associates.

Procurement spending of about $30 billion in 2007 was forecast to soar by 28 percent in 2008. But that is most certainly not going to happen, he adds. "The Navy cannot likely achieve currently planned procurement, even if it freezes both personnel and operations costs.

"However, the Navy can credibly achieve $12 billion to $14 billion a year in shipbuilding, plus $10 billion to $12 billion a year in aircraft procurement," McAleese predicts.

On the aviation side, the Navy is almost guaranteed to secure funding for the F/A-18E/F Super Hornet, the Marine Corps' V-22 Osprey, the MH-60R helicopter and the P-8A anti-submarine patrol aircraft, says McAleese. One program potentially on the chopping block is the broad area maritime surveillance unmanned aircraft.

The Navy has committed to funding an average of $14.4 billion a year for new ship construction in order to boost the size of the fleet from 280 to 313 during the next three decades.

Congressional budget analysts, meanwhile, assert that the 313 ship plan requires far more funding--$16 billion to $19 billion.

According to McAleese, "any increases significantly beyond $14 billion a year should be difficult to achieve," particularly between 2008 and 2010, when the Navy is slated to buy a new aircraft carrier. The carrier alone requires more than $10 billion over those three years. In those years when the carrier is funded, the Navy, realistically, will be "lucky" to afford $10 billion a year for other ships, he says.

McAleese notes that the political environment for shipbuilding has improved substantially with Democrats in charge of Congress. All indications are that lawmakers on the defense authorization and appropriations committees will support increases to the shipbuilding account, he says.

One of the winners of the shipbuilding budget will be the new Zumwalt-class destroyer, the DDG-1000, McAleese says. The Navy is expected to spend nearly $27 billion on the program, at roughly $3 billion to $4 billion a year.

The Navy plans to award two construction contracts this month--one to General Dynamics and one to Northrop Grumman--for the first two ships of the class, says Rear Adm. Charles Hamilton, the program executive officer.

Hamilton says he is optimistic that the Navy has a "balanced" shipbuilding plan and that Congress will support it. Despite all the "drama" that shipbuilding generates on Capitol Hill, in 2007, "we got more ships than we asked for," Hamilton says at a recent conference hosted by the Surface Navy Association.

The Zumwalt class will be relatively small at seven ships. But each ship will contain technologies--in the form of sensors, weapons and propulsion systems--that will be far more advanced than any other vessel has ever seen, Hamilton says. The ship's high price tag, of about $3 billion each, forced the Navy to downsize the quantity of the buy and also...