[does Al Qaeda have subs?] 6 Nuclear Submarines To Cost $8.7 Billion Price of New Fleet Keeps Climbing
By Dan Morgan and Renae Merle Washington Post Staff Writers Friday, August 15, 2003; Page E01 The Navy announced yesterday that it will buy six nuclear-powered attack submarines for $8.7 billion from General Dynamics Corp. and Northrop Grumman Corp. The five-year contract is the most expensive submarine order in Navy history. It is part of a long-term program to acquire 30 submarines that has drawn criticism from Congress for its escalating price, which has jumped 24 percent in the last two years. The contract announced yesterday ends more than six months of tense negotiations between the Navy and the contractors. "It's been a challenging negotiation," said John Young, assistant secretary for research, development and acquisition. The deal provides a welcome financial underpinning for the companies, General Dynamics said in a prepared statement. "The two shipyards now will have [a] stable workload," said Michael W. Toner, executive vice president of General Dynamics Marine Systems group. The submarines, known as Virginia class, were designed to be smaller, cheaper and capable of getting closer to shore than the current fleet. They will be built at General Dynamics' shipyard in Groton, Conn. and Northrop's facility in Newport News, Va. Defense bills have passed through Congress this year with little debate. But concern for the rising cost of Virginia-class submarines suggests that even the Pentagon is not immune from budgetary pressures, what with a growing federal budget and cost-cutting in popular domestic programs such as Amtrak and health research. The estimated cost of the 30 vessels has soared to $81 billion. If cost overruns accumulate, the program could be cancelled under a 1982 law intended to impose fiscal discipline on military procurement, unless Defense Secretary Donald H. Rumsfeld provides a special "national security" waiver. Few expect Rumsfeld to terminate a program that is so central to U.S. global strategy. And, General Dynamics and Northrop Grumman employ nearly 10,000 workers to build the subs at Groton and Newport News. Adjusted for inflation, the $74 billion that the Defense Department has requested for fighter planes, helicopters, ships, unmanned drones and other hardware in 2004 is still below the peak reached during the Reagan administration. But the weapons-procurement budget is due to grow to more than $100 billion by 2008 in the longest expansion since World War II. After dipping briefly in the early 1990s, it has been rising since 1996. Those factors, and changes that have tipped the global military balance overwhelmingly in favor of the United States, have caused a few analysts to question the need for 54 attack submarines, the size of the current fleet. "You don't need a whole force of subs when the Cold War is over. It's a case of bureaucratic and congressional politics," said Ivan Eland, former director of defense policy at the Cato Institute. Eland says 25 would be enough. Christopher Hellman, an analyst at the Center for Arms Control and Non-Proliferation, suggests the Navy's "love affair" with nuclear-powered ships has kept it from considering cheaper options, such as diesel submarines. "I'm not sure the growth of terrorism requires the growth of the sub fleet," he said. For the Navy, however, scaling back the Virginia-class program would be a setback after a decade-long effort to revive submarine production. The collapse of the Soviet Union largely did away with the fleet's main mission: tracking Soviet subs. With Russia in political and economic turmoil for most of the 1990s, the number of Russian subs putting to sea plummeted. President George H.W. Bush, responding to the changed situation, canceled a new generation of Seawolf submarines. The Navy, in turn, reinvented the mission of the attack sub. In a world full of terrorists and upstart military powers, it would become a stealthy warrior carrying out missions in the shallow waters along hostile coastlines. The Virginia class was designed to fill the bill. In 1998, Congress and the Clinton administration approved initial funding. Navy officials say the smaller conflicts of recent years have demonstrated the value of attack submarines. Such vessels fired a third of the cruise missiles in the war against Iraq this year, and continue to gather intelligence for U.S. military commanders watching developments in Asia and the Middle East, defense officials said. Military analysts say the submarines could be used to break a Chinese naval blockade of Taiwan, sneak in to destroy shore batteries threatening U.S. surface vessels and torpedo shore-hugging diesel-powered submarines such as those in China's fleet. The new Virginia class will have a "lockout chamber" from which to discharge Navy commandos underwater; cameras and sensors to spy on enemy shipping and intercept conversations, and tubes for firing cruise missiles without surfacing. Later models may be equipped with modules for sending out underwater robots to chart mines or track enemy subs. But the rising costs have caught the Navy by surprise. >From 1995 to 2000, the Navy estimated that the total bill for the program through >2020 would be about $65 billion, after adjustment for inflation. But in 2002, the Defense Department estimate was $73.4 billion. In April, it was raised to $81.8 billion. Under the Nunn-McCurdy Act, which Congress passed in 1982, the secretary of defense has to certify that a program growing more than 25 percent above its "baseline" is essential to national security. He also must specify that new cost estimates are reasonable and that costs are being controlled. Cancellation of programs under the act have been rare. In 2001, Rumsfeld used it to terminate the Navy's sea-based short-range ballistic missile defense system. The Pentagon's Special Acquisitions Report issued in April cited higher labor and material costs for the Virginia, the first of the Virginia-class subs, and three other boats under construction, and unexpected costs arising from the need to treat the hulls with a seamless, rubber-like substance molded onto the hull surface. Early this year, Edward Aldridge, the Pentagon's acquisitions chief, accused the shipyards of "gouging" the Navy after bids for the next batch of boats came in about $1 billion higher than the Navy had expected. Negotiations narrowed the gap. Executives at General Dynamics, the lead contractor, say the major costs, including steel and other materials, are beyond the shipyards' control. The reactors, one of the most expensive parts of the vessel, are supplied by the government, and costs have been rising, according to Navy officials. Although labor costs are rising 5 percent a year at the yards, productivity is up and the boats are on schedule, said Kendell Pease, spokesman for General Dynamics. But the higher costs are forcing the Navy to make difficult choices. Within the overall shipbuilding budget, submarines must compete for funding with a new generation of surface vessels, including destroyers, cruisers, amphibious ships, and other ships that will soon begin replacing the current fleet. Given that reality, congressional budget officials say, the Navy's plans to accelerate sub production to two or three a year late in the decade appear extremely unrealistic. "It's very unclear that the Navy can sustain building submarines at nearly $2.5 billion a pop," said Robert Work, a naval analyst at the Center for Strategic and Budgetary Assessment. "They chose the Virginia class because it would be cheaper than Seawolf, but they have been unable to control costs and they're in a pickle."
