Skip to main content

tv   Hearing on U.S. Aircraft Carrier Program  CSPAN  October 5, 2015 3:44am-5:57am EDT

3:44 am
cat what it takes to get something through the senate these days. and if the majority doesn't have that, in effect, nothing is going anywhere. just what does it take for a president to sustain a veto? count that and you know how difficult it is to overturn a presidential veto. so i think better education on all levels as the caller says is important. but it's much harder to build something up than it is to tear it down. you can tear something down in a word. but to explain to someone what the work is that goes on in that building, the constraints they are up against, takes longer. it takes listening to c-span. so we're glad you did. host: let's conclude where we began. discussing the vote scheduled for this thursday. we want to emphasize it could change. this tweet just a moment ago
3:45 am
from the fox news program, jason chaffetz is the guest. saying that mccarthy has a math problem. he doesn't have the 218 votes on the floor. guest: that's right. but if you follow what this freedom caucus in the house is saying, they have a block of 30 or 40 votes. they could give him the 218 he needs for a price. the question is what is the price? what will it do to the institution if you basically open the door for any amendment that they want to bring to the floor and what kind of promises is mccarthy being pressured to make? getting to 218 is good news for him. but it's good news for the country and for the institution only if the promises that get him there aren't destructive in some other way.
3:46 am
host: gail russell chaddock >> on today's washington journal , president of the lines for justice and carry separate no on the state of the supreme court. the upcoming doctrine. we take your calls and you can join the conversation on facebook and twitter. washington journal, live at 7:00 a.m. eastern on c-span. >> tonight on the communicators, chip pickering, ceo of calm tell discusses spectrum auction, net neutrality and other issues including video and broadband. interviewed by david
3:47 am
count. >> transitions from copper and ip to -- circa switch to new networks. how do we make sure our public safety, competition that is taken root in the marketplace continues and thrives? how do we make sure that our critical institutions, schools, libraries, hospitals, first responders, the services they depend on those networks, how do they go into the next technology -- this transition with everything being sustained? ip is what we all want. it gives a better service. it lowers the prices. >> tonight at 8:00 eastern on the communicators on c-span2. >> next a senate hearing on the funding for aircraft carriers. a q&a with honey morrow, supreme
3:48 am
court correspondent for the national law journal. live at 7 a.m., europe comments atwashington journal -- live 7:00 a.m., your comments on washington journal. >> on thursday, the senate arms services committee held a hearing. they are facing chronic delays -- chronic delays and are over budget. this is over two hours.
3:49 am
morning.ccain: good for 13 years, the department of air defense has sucked to develop our newest aircraft carrier. by ad in the beginning newer class of this ship. it is one of our nations most complex and expensive defense acquisition projects. mosts become one of the spectacular acquisition debacles in recent memory. that is saying something. the fourth class program is estimated to be more than $6 billion over budget despite the recent announcement of a two-month delay, the first ship is scheduled for delivery next year. the second ship is five years behind schedule. significant questions still remain about capability of the core systems.
3:50 am
chief ofked the former naval operations who is responsible for the cost, he said he did not know. this committee has been involved with this program since the very start. since the beginning of this year, our oversight has increased significantly. at the direction of senator reid and myself, committee staff has conducted a thorough investigation of the fourth class program. the work is in review of thousands of pages, documents contracting information, correspondence and testing data, including interviews. this work has been done on a bipartisan basis in keeping with the best traditions of the committee. we meet with clear goals. examine what has gone wrong to identify who is accountable. to assess what these years mean
3:51 am
-- what these failures mean. how to prevent these failures from happening again. to help us answer this questions are the key civilian officials who are responsible for overseeing the ford class program. katrina mcfarland, assistant secretary for acquisitions is it the pretzel advisor this is the principal advisor. sean stokley, assistant --retary of the navy responsible for the research development and acquisition of navy and marine corps systems. her -- michael men as admiral michael manazir. thomas more is responsible for
3:52 am
aircraft currier -- aircraft carrier acquisition. j michael gilmore, director of advisorn is the senior for operation on live fire test and evaluation of weapon systems. mr. paul francis, managing director of acquisitions and sourcing management at government accountability management whose forty-year oneer is focused mostly major weapons acquisitions, especially shipbuilding. we think each of our witnesses -- we think each of our witnesses for joining us today. rumsfeld and the navy conceived of the uss as aerald r ford
3:53 am
transformational system. they decided to integrate on a ofp all at once a host unproven technologies, including a new nuclear reactor plant, and electrical distribution center, a flight deck, and a new band radar. gear.vanced arresting thatwas the original sin so damaged this program. since 2008, the procurement costs has grown by $2.4 billion, $12.9r a total cost of billion. the story of the uss john f. kennedy could be worse. the department of defense begin building it before approving the new systems on cbm 78. while continuing to make major
3:54 am
changes in 1979, including a new radar. a ship with all of the associated problems. has risenated costs to a 11.5 the and dollars. -- $211.5 billion. has beenhe cost growth due to problems with major components, which the navy has been developing separately. have faced their own significant cost growth and schedule delays. they are still not ready here it for example, the advanced arresting gear or aag was built to be more efficient to cover more variety of aircraft on the deck. however, ag's costs have more
3:55 am
than quadrupled. it is expected to take twice as long as originally estimated. 15 years in total to complete. if they go to see goplanned in 2016, it will without the capability to recover all of the aircraft's that land on the ship. per-unit cost,s the navy will be unable to upgrade with this new system, as originally planned. 2030's, manyat by of our naval aircraft may only be able to land on a few of our carriers. for program is symptomatic of a larger problem. a decade of oversight reporting show that it is an plagued by the same problems found throughout navy shipbuilding's
3:56 am
and most major defense acquisition programs. unrealistic business cases, poor cost estimates, new systems rushed to production and current design and construction, and problems testing systems. all of these problems have been made worse by the absence of competition in aircraft carrier construction. once more, the ford class the -- to mylifies knowledge, not a person has been accountable for the failures of this program. to diffusion of authority across multiple officers. these lines of accountability allow the leaders of our defense acquisition to evade responsibility. everyone is responsible so no one is responsible.
3:57 am
deserves much of the blame, the decision authority rests with the office of the secretary of defense. specifically the undersecretary of defense for acquisition, technology and logistics. responsible for determining whether a program anda sound as this case approving the start of development and production. the navy can be faulted for excessive optimism and efficient realism. complacent orer complicit. navyd, they authorized the to start construction when only andof the ship was designed only five of its 13 systems were mature. despite 10 years of warnings from its own independent cost estimators and weapon testers, as well as the gl o, they failed
3:58 am
to make timely corrections. unless anyone thinks congress is above reproach, we are not. while oversight has helped to control the costs, we could have intervened more forcefully and demanded more from department of defense. we did not. we need to internalize the lessons of this program. i am encouraged that the navy appears to be doing so on their efforts to stabilize the program and change their approach to contracting. this year's national authorization act contains several provisions that increase oversight of the ford class program. streamline authority accountability in our defense acquisition system. perhaps the lesson that i would most address is this, we cannot afford another acquisition failure like the ford class aircraft carrier, especially in the current environment. pointnot afford to pay 12
3:59 am
-- to pay $12.9 billion for a single ship. if these costs are not controlled, we must be willing to pursue alternatives that can -- on time and on budget. we must be willing to question whether we need to go back to building smaller aircraft carriers that can bring new competitors. we might have to consider rebalancing our portfolio with you are carriers and more weapons. if we can't do better, everything must be on the table. so long as i am chairman, it will. i think the witnesses and look forward to their testimony. >> thank you very much. for your advice and insistence
4:00 am
we pay close attention to this gram and other programs to. the general ford program has been plagued since its inception over a decade ago. at today's hearing we're focused on many of the problems. delays -- some of the problems stem from the new technologies that have not sufficiently matured. these immature technologies are critical for successful operation. the dualce gear and band radar. each of these systems have scheduled challenges and millions of dollars over budget. while i recognize that designing --a difficult enterprise,
4:01 am
there is a larger issue. if you look back at the inception, the navy was facing the retirement of the uss enterprise which was scheduled to one out of fuel and 2013 or 2014. what woulden to become the next aircraft carrier. the program was intended to involve technology over to ship program. whenstalled new systems they achieved new systems. while that may not have been a perfect, the two-step land was more in keeping with the acquisition approach. late 2002, the navy was directed by the secretary of
4:02 am
through a program that was more transformational. it caused dod to make whiskey choices in the aircraft program. we're living with the results now. navy is not blameless in this process either. they share blame for failing to layout plans for risky technologies. -- the navy and the contractor ship were blamed before sufficient work had been completed. costry has shown
4:03 am
increases. finally, congress shares responsibility for having approved an approach to acquiring these
4:04 am
the program was initiated in 1996. its development and procurement time lines have spanned numerous administrations and multiple changes in acquisition policy as the chairman and ranking member noted. the program has been subject of many multiple program reviews looking to reduce costs and achieve efficiencies that have redirect it had acquisition approach or technical baseline. as with all the department's programs the 78 has had to compete for the resources in the budget review. and while each change and policy acquisition approach or technical baseline was made in the best interests of the warfighter, the department, and the tax pear in mind the cumulative effect has resulted
4:05 am
in program instability. since 2010 and coincident with the initiative this program has been largely stabilized. the timeline and complexities associated with the construction of erik carriers are enormous -- aircraft are enormous. many of which cannot be predicted in time to be readily
4:06 am
mitigated nevertheless we are combhitted to applying the resources needed to keep control program costs and schedules and deliver these carriers to meet the needs of the war fighter. again, thank you for the opportunity to appear today and i look forward to your questions. >> thank you for the opportunity to appear today to discuss the carrier program. this committee and no one more than you, mr. chairman, fully understands the role of the carrier's an instrument of diplomacy power protex and global security. george will summed it well in his column yesterday. the navy's operations in which the sun never sets are the nation's nerve endings connecting it with the turbulent world. although the next president may be elected without addressing
4:07 am
the navy's size or configuration they will be acutely aware of where the carriers are. the newest will be the gerald r. ford, the first carrier designed since the anymorites. the ford itself will be in service for 50 years in a three 80. class until almost 20 our future carrier course have the capability necessary to defeat the future threat but two does so at a cost that the nation can bear. designing building manning operating and maintaining these incredibly complexion shipt are beyond any undertaking. those members who visited the ford under construction appreciate the daunting numbers that measure. tens of thousands of structure
4:08 am
thousands of miles of cable and fiber optics hundreds of miles of pipe thousands of compartments hundreds of ship systems tens of thousands of sensors greater to drive 1,000 ega wath of nuclear power is a remarkable demonstration of what it is able to achieve and combauntium increase of our capability of war fighter acquired by the navy associated ahead. to be clear, however, this program has had significant challenges resultling in unacceptable cost growth and understand the cause it is important to understand the carrier's history. the anymorites half life it was addressed. a total of 23 new capabilities were to be incremently introduced across three ships commencing with the 77 at a
4:09 am
pace consistent with the maturity of the related technologies. these would provide a 33% increase at the rate in which aircraft are launched and recovered. providing three times the capacity and 20% energy increase increase surviveability including provements and importantly a $4 billion reduction per ship in total ownership cost over the 50 year life. development was initiated for the system the advance arresting gear and the weapons elevators. modernization of weapons sensors and communications systems would be accomplished by incorporating new capabilities being developed by other programs including the state of the art dual band radar.
4:10 am
a new power distribution and utomated control systems developed to meet requirements and carrier super structure would be redesigned to enable improved flight deck operations and all of these would of ibute to a reduction the sailors. put on transformation by the secretary of defense d.o.d. change coursed such that is the three ship incremental modernization would be accomplished in a single step. this decision result in what has proven to be a high degree of development and construction. costs were estimated and design and construction proceeded with inadequate information regarding the complexity of the
4:11 am
systems. ultimately impacting cost and performance in each phase of development design build and test. today design is effectively complete and production is near 95 complete and we are focused on completing the test program and delivering the lead ship. actions put in place from 2009 through 2011 have been effective in halting the early cost growth including converting the design from a level of effort to a completion contract with a firm target and incentive fee. placing contract design changes under strict control reducing e consistent with contract cost performance. reducing overly burdensome restrictions imposing unnecessary cost to mitigate the significant impact of material delays raising completion levels at each stage
4:12 am
of production. meanwhile, following a detailed review in 2009 the navy converted the contract to a firm fixed price contract to production to cap costs and the ship builder to review by competitor ship yards in order to identify changes necessary to improve performance. finally management changes were instituted and coupled with increased reviews focused on cost performance and path issues to ensure we are doing to all we can do to improve cost performance. i have assigned for these past four plus years rear admiral moore, a navy officer with a single experience across management as a program executive officer. importantly, while we confront
4:13 am
the impacts we have made essential changes to eliminate these causes for cost growth and to further improve performance. as reported to congress in may f 2013 requirements for cbn 79 are locked down. the design model is complete nd 80% released. materials being ordered efficiently and on schedule the ship builder has leveraged lessons learned, made significant investments to modernize tooling and facilities and has implemented rel changes sequence for ust in cost.
4:14 am
the net result of all these actions was the recent award as a fixed price construction tract that in conjunction with gfe, government furnished equipment, procures the 79 at or below the cost cap. we're on target and will continue to reduce the costs of future ships of the class. mr. chairman you have raised questions regarding accountability. i am accountable for the decisions i make about this ship or any marine corps program. this simple statement doesn't adequately address your concern. the krnt system is challenged to a line responsibility, accountability, and decision making. the large complex programs that take years to develop and deliver. this program in particular has spanned four secretaries of the navy six chiefs of naval
4:15 am
operations, four naval acquisitions, six defense acquisition executives, four program officers and eight congresses. decisions have dean critical. the decision to pursue traps formation approach driving three into one was made for what was believed to be the right decision at that time. as the acquisition executive what can be done to stabilize the cost and pursue cost performance improvements on the remainder of the class i believe is being done. we have much further to go in this regard but i believe we are on the right path. going forward under the secretary's direction the cno, the commandant and i, are changing the way we do business within the department of of the navy to achieve much greater clarity of authority, traceability, to cost, visibility to performance, and
4:16 am
therefore accountability for cost and schedule on our major programs. we hope to have the opportunity to share these details with you and your staff. in sum, your navy is committed to providing our sailors with the capability they need to perform their missions around the world around the clock every single day of the year. and we strive every day to do this in a way that enhances ffordability while ensuring we . intain the ro dust >> i'll briefly summarize my written statement. whether the projected quantum improvements in effectiveness and total costs will be realized associated with the new systems being incorporated are now now known the navy indicates the reliability of the system advanced resting gear and dual band radar will
4:17 am
support initial test and operation and first deployment. most recent data i have of more than al a factor of 10. we only have engineering estimates of reviability. prior to its redesign reliability was a factor of 800 below its goal. data will be available later this year as a result of ongoing testing. the case of emals, it's above the growth curve however as a consequence of poor performance and test that was base lined to well below the reliability goal and consequently the data we have was not on its path to meet the goal. the effects on combat effectiveness, if any, in the ultimate reliability could be will not be known until tests
4:18 am
that are conducting post delivery. in particular the specific nature of the failures encountered in their difficulties will be important to understand. in that regard the navy has recently indicated that the failures and components can result in being down for extended periods. this is because of no ability to read readily isolate components as in current fleet operations while flight operations are performed on operating catapults. the systems will also be a system for the ford class will actually be realized. the scheduled activities subject to its delivery is determined primarily be the safety and training requirements. operational testing, which cannot be accomplished until
4:19 am
complete will be conducted as part of a joint task force exercise part of the training evolution for the ship air crew. the plan is to test systems realistically to provide feedback and to combine training and testing. nonetheless, the current test schedule remains in my view aggressive and with some developmental testing including very important testing continuing past the start of operational testing. directed the deputy the navy historicling experience indicates clearly this is a key means to identify and mitigate critical mission failures before the ship and her crew deploy into harm's way. finally, it was designed to reduce manning thrish reduce costs. however concerns raised that would only be exacerbated by
4:20 am
any shortfalls realized and the reliability of e-mails and dbr. in particular the war gaming 3 stages front end analyses have not been analyzed. and that won't be possible until we know more about what the reliability will actually see and what their maintainability will actually be. thank you. >> thank you, mr. chairman, mr. reed members of the committee and members, i appreciate the opportunity to talk about the carrier program this morning. et me start with the 78. my bottom line is the same story, different program. in 2007, we reported that costs were likely to be underestimated by 22% under construction of the ship and that the three main technologies were immature,
4:21 am
likely to slip to the right, and out of schedule margin. and we said the navy would be faced with the decision to either push the ship to the right or push the technologies to the right. fast forward to today. 2015. cost increases are 22%. the three key technologies -- we don't have the slide up but they've slipped about five years. so the decisions made to keep the ship construction schedule pretty much intact but let the technology slip. so that's probably hard to see. but the top chart we've circled here three four five and six. those are the three key technologies in the beginning of ship board testing. so the original plan was clearly fly before buy. where we are today is that they have all slid past ship launch. so that's buy before fly. so my view at this point is
4:22 am
that ship costs are going to continue to increase full cape ability the ship has been deferred. right now we're looking at getting less for more. why would i say that? i remember 25 years ago i was interviewing the second undersecretary of defense john betty and he told me cost estimates in the department of defense, it's not like they're impossible to be achieved. but they do count on hitting seven home runs in the bottom of the ninth. so i apologize for the sports analogy but it's not mine. so let's look at the home runs that the cbn 78 has to hit and you can kind of see them bunched up here. land-based testing, ship-based testing, integrated testing, iotne, all the time we're trying to complete construction. so it's a big lift. let's go to the 79. what are its home runs.
4:23 am
right now the cost estimate depends on reducing construction labor hours by 18%. 9.3 million labor hours. never been done before. the dual band radar has been removed. it will be replaced with a radar that is to be determined. and upgrades that were planned for the ship have been postponed. so i think that's bringing a lot out of the program already. it's already with all these changes at cap and we're 7 years from delivery. again, i think cost increases are likely regardless of what's reported against the cost cap. so i would like to put the carrier in a little context here against acquisition and i think you brought this up as did mr. reed. the 78 program is a dipcal acquisition outcome. 22% increase in cost scheduled delays are actually pretty typical for acquisitions.
4:24 am
and i have testified before you a number of times on different things but we can think of worse examples. jsf, fcf, f-22, lcs. so i think what's different here is this program we knew all along this was going to be the case. we shouldn't g surprised by anything that's happened here. so we saw it coming. it's not an i told you so moment. it's we all knew it. so i ask yourself, why does something like this happen? best practices are pretty well known. mature technologies before you put them on the program. wasn't done here. go with the realistic cost estimate and budget to it. we've always gone with the lowest cost estimate the navy's estimate and we still are. and fly before buy. it wasn't done here. so you ask yourself why don't we do these things? and my belief is that it's the prevailing acquisition culture. it's the collective pressures
4:25 am
that the different participants bring upon the process that create incentives for programs to overstate what they think they can do to understate technical risks to understate costs and to understate schedule. that's how you get funding, that's how you get programs approved. so i would just like to say where does this leave us today? and i will say i know it's popular today to talk about the acquisition process being broken. but i think it's in a happy equilibrium. well, maybe not so happy but it's an equilibrium. it's been this way for 50 years. and i think it's going to stay this way until the incentives change. and as the chairman said, i've been in this job for 40 years. i haven't given up hope yet. and i believe that congress is the game changer here. i think congress can change
4:26 am
incentives by reclaiming its oversight role which i think has been diminished over the years. so what do i mean by that? i will cite three things. first is your most important oversight tool is the initial funding you provide to a program. but you give that tool up pretty early. so if i'm a program today and i'm at milestone b, congress had to approve my funding two years ago. information was less, optimism fills the void. there's a cardinal rule that says don't take money off the table. so once you've approved my funding two years later actually made the milestone b decision for me. the second thing is i know the committee has many, many heavy responsibilities but one of your responsibilities is you're the appeals court for the services. so if osd says something a service disagrees with, and i'm
4:27 am
speaking broadly, if mike says something they don't agree with, if the case estimate they don't like, if it's a g.a.o. recommendation they don't like, the services come up here you're the appeals court and i try to strike a deal. then finally a movement in the department, and i think particularly with the navy, is the bundle up programs. multiyear procurements block buys and option contracts, so not only do you give up your funding initial funding power you can't touch the program afterwards because it's all locked down in a blocked contract. so i guess my appeal to you today let's not think of the 78 program as the story per se, but let's think about it as an object lesson in acquisition process and acquisition culture. and what the congress can do about it.
4:28 am
not just telling what the department can do but how you might do differently because i really think what you do with money sends messages as to what is acceptable. thank you, mr. chairman. >> thank you. have you seen some of the changes we've made in acquisition and defense bill that we've passed through the senate? >> i have, mr. chairman. >> are those steps in the right direction? >> i think they're in the right direction. in many cases for the department. but i think as you said in your opening statement to the extent the department comes in with a bad business case, if you still approve it and fund it you're sanctioning it. so with all of those improvements in acquisition reform legislation, that has to be coupled with what you do on programs. and i think a couple of good no's would be healthy.
4:29 am
4:30 am
most of the functions performed. and the challenge is the culture and it is the people. it's the workforce itself. i think the department is very grateful for the committee and for the congress in providing acquisition workforce development funds to help but inside there needs to be a constructive change to how we work together as a team to provide these products. >> i'm going to buy back one moment of that too. he hit the word incentives and the context that he uses that i would make much broader. if you look at the complexity of our system end to end starting with congress right down to program manager and industry the int centives are not all aligned to the same outcomes.
4:31 am
as long as that is true we have forces pulling in opposite directions. >> i would like to direct the witness' attention to probably one of my most egregious aspect of these cost overruns and of course that's the advanced arresting gear which from original estimate of $143 million is now an estimate of $1 billion. it grows so much that two years of his just this aspect the carrier had grown so much it hit the threshhold to become a major program and it continues as we mentioned to go up. i understand the navy has assessed how the contractor has performed on this program as is consistently substandard. we ask the contractor and the
4:32 am
department's contract management officials, they characaterize this type of performance which to my staff is typical or average. secretary, do you agree with the characteristic that a cross growth of 600% is typical or average? >> absolutely not, mr. chairman. >> secretary, on page 3 of your statement you said acknowledging that the problems have had the largest effect of construction you stated these engineering design problems are now in the past, that's in your statement. and i have in front of me a defense contract management agency evaluation of the aag contract performance tomorrow just this past month that directly contradicts the statement then in fact expect additional delays that have not been resolved. i understand you oversee the contract management agency. tell me, what's the disconnect
4:33 am
here between you and the people making this estimate and can you assure this committee that this cost increase has stopped? >> i do not believe that the cost has stopped. i do believe that the majority of the engineering and respects of this program in terms of technological risks and development have been retired. there is still testing to be completed. there is still opportunities for risk to be realized as part of this effort. and i do believe that there will be activities in front of us. it's essential that we have in front of us a program that has sunk a lot of effort into getting it where it is. , d to provide for the carrier it does not make a good business case. >> i would point out that recently the manufacturers of the new tanker experienced cost
4:34 am
overreturn. they absorbed that cost overrun within that corporation. i wonder if maybe we should make that a standard procedure here in defense contracting. be the t should subject of a lot of conversation. senator reed. well, thank you very much, mr. chairman. and first dr. gilmore, you urged that trials be conducted on the 78 and those are not going to be done they're going to be postponed to the next ship in the class, 79. wrote to the navy basically accepting your advice and your opinion why is it so important that these be done on the 78 and not deferred in your view. >> first of all, as i mentioned in my testimony, deputy
4:35 am
cretary decided to direct it be done before its deployment last month. he made that decision because history has shown clearly, the history has shown clearly that they are the only way to discover mission critical failures. there has been some claim that component level shock qualification testing, which had not been funded. now the navy says it will do it, and modeling simulation are sufficient. but if those were sufficient we should never see any mission critical failures when we do shock trials when conducted at less but we always do. i think back. it was captain hunt who sent the letter a -- committee a letter. indicating his experience with shock trials and how they provide it had key information
4:36 am
that enabled his ship to surscrive and function in the gulf after being hit. so the history is clear. that you will not know about mission critical failures unless you do the shock trial and i can assume and i know that the history that we presented to the deputy secretary and the secretary figures in that decision. you're or the record, on board no pun intended with the trials for the 78? >> sir, we're moving out. dr. gill more made reference to the component testing. the testing was being lined up with a a potential 79 full ship shock trial. we're moving that back to the left to support the 78. >> thank you. let me follow up with the issue of off ramps particularly when this was decided in 2002 to be a transformative technology and
4:37 am
risk went definitely higher. in other cases you have used ff ramps i know with the ddg-1000 you were able to select a different type when the desire or at least the the breakthrough technology materialized. what's your position with respect to the 78 and 79 and others? do you have a backup or are we just going to follow this down to the point at which it can't work? one of the points i think senator mccain made very useful is if we have a system, then we are diminishing our force projection. >> yes, sir. you're touching on the off ramps is striking a chord here. the amount of risk that was
4:38 am
stacked up on the 78 without adequate off ramps put us in just an untenable position where we ran into issues. i made reference to this review that we did in the 2009 timeframe. that was with concern cost and technical regarding the programs' performance. at that point in time we had the ship was off and running in terms of production. so we look at a potential off ramp it would have caused a significant halt of production, delay, complete redesign of many of the ships systems to bring steam back up to the flight deck to go to an alternative. so there was no tenable off ramp in that regard and much of our focus then became will the system work? are we confident the system will work. can we cap the cost? that ended up loding to a decision. with the ceo chairing that decision board. that we're going to press on
4:39 am
because of the trades in cost one path or the other the impact on schedule, the impact on performance, if we were to that point in time taken off ramp that we had not planned. going back in time. if we had the ability we could have in fact laid in an off raverple in the early design stages of the cbn 78 in the event that we determined it was not mature enough. i think this man if hetation of at became a highly concurrent, compressed development for production, design, production and also decisionmaking. your example going from what was going to be the permnant higher risk, it failed in test. we had a backup ready in materials of the advanced motor to replace the pmm and that has proven very successful in terms of its completion development. >> going forward.
4:40 am
>> going forward. yes. >> one of the lessons of this very expensive exercise is that when you're doing transformative technology very high risk technology will you always make it routine to have an off ramp? >> yes, sir. our assessment of technical risk, if we have a high risk system that we're bringing to a production program we've got to keep a hand on what are our alternatives at least to a certain decision point where the confidence is compelling to go forward. >> thank you very much. >> you specific asked about going forward. >> sir we have absolute confidence. we have conducted thousands of cycles on that system. we have gone through what we refer to as high cycle fatigue testing, highly accelerated lifetime testing. we have a system at lake hurts that is demonstrating the performance that we need. aag is behind where we need to be. that's not because it's poorly designed. that's because we're behind
4:41 am
where we need to be in terms of time to demonstrate reliability test fix test fix so we have that emerge between development and production going forward in terms of an off ramp first question that -- every meeting i have i ask is the system going to work? to make sure there's no doubt, so we can address it. the chairman described how there was a plan to back fit the an ag and that's proven to be not affordable. that's not affordable as much because of the impact of the carrier than the cost of the system itself. but if we had to, we could. >> how many years have we be seeing that? it's a remarkable record. >> senator. >> thank you, mr. chairman. secretary, gentlemen, thanks for being with us today.
4:42 am
test fix, test fix. how long are we going to continue to do that? >> when it comes to every developmental system, we are on the ing test and fix system that's been in the fleet for 30 years. so there's going to be a continual test and fix as you add in improvements. the 78 we'll be in a test and fix mode right through operational testing. we'll identify further issues and just like we do with every system that we bring to the fleet and continue to fix those. today test and fix is primarily software related. not hardware. >> and where is this carrier right now? >> the 78 is about 95% complete at the peers at newport news ship building. >> it's sitting in a shipyard. correct? >> yes, ma'am.
4:43 am
>> well, iowa we don't have shipyards. the only time it matters to the folks back home for me is when they are actually out there operating. now, across the military service, i have been told that 90% solution on time is better than the 100% solution too late. and at some point this was going to be too late. and we are rapidly approaching that. now, you have been the assistant secretary of the navy for research development and acquisition since 2008. and that was the same year the 78 procurement was authorized. have you ever received adverse action by the navy or d.o.d. e to the delays and the $2.4 billion cost growth? >> no, ma'am. >> has anybody within your chain, your structure, have they ever received adverse
4:44 am
action for this? >> in the chain, yes, ma'am. >> and can you describe those actions to me, please? >> there was a program manager associated with the aircraft launch and recovery equipment who was relieved of his responsibilities. >> and at what level is he? >> program manager, captain of the united states navy. >> and secretary, also have you received adverse action? >> no, ma'am. >> has anybody within your structure been not reprimanded, not to your knowledge? folks, this is -- i can tell you, a lot of folks have been let go for a lot less. and you can tell i am extremely frustrated with the cost overruns not being on time. there's no excuse. you can talk about all the gadgets that you want. that's fantastic. but i will tell you that this is affecting all the other services as well.
4:45 am
i still serve in the national guard. i'm a ground pounder, good for me. we are losing in the national uard with this new ndaa 8200 national guard soldiers. we're being cut 1100 dual status technicians. we're losing 800 active guard members. we're being cut. at some point this is going to hit the navy too. we keep spending money on gee whiz gadgets some day you out of have the thing port. the taxpayers are going to hold everyone responsible for this. i have been working very hard, early hours, early months of my work here in the senate in the committee and in homeland security trying to restore the program management process. and i had a bill pass unanimously out of his out of
4:46 am
the program management. specifically for the department of defense. but unfortunately it didn't survive a conference. and i'm baffled. i am baffled why we're not focusing on program management and cost overruns. this is an epidemic. and we've got to do something about it. i'm sorry i am on a soap box but i'm upset the folks back home are upset. it doesn't do us any good unless it's out there protecting the people of the united states. if we keep settling on it, it doesn't do us any good. so i would like to hear a response. when are we going to get this done? anybody. anybody. please. >> let me specifically address the 78 in terms of the navy. the 78 at one point in time it was going to be a 2006
4:47 am
procurement, delayed to 2007, delayed to 2008. as was described earlier she was tied to maintaining 11 carrier navy. today we're at 10 carriers. the requirement is for 11. since the ship was put under construction there was a four-month delay. that was associated with getting completion levels to control the cost going forward. since that time there was a delay that we announced a couple weeks ago which was tagged to ensuring that we maintain the discipline and cost in excuting the balance of the test program. we have not moved the delivery date. we changed the trials date. so today we are still targeting in april could go into may delivery date for the 78 all of that lines up to get the ship on its scheduled deployment in 1e9. >> i appreciate the response. i hope everybody understands my frustration as well as the
4:48 am
other members on the committee. this has got to be corrected and somebody needs to be held accountable. >> may i make a comment. >> absolutely. >> i think your concerns about the budget are well founded and how those bills are going to be paid. i think if you look at the cbo's analysis, if it's excuted as it's currently planned the navy will need a bigger budget so that's on the navy's side. on the air force side we have the tanker we have the jsf and the long range strikes is coming. and at the same time the army is shrinking. so those bills are going to have to be paid somewhere. and if they're higher than we think now we're going to be in real trouble. and on the program managers, i remember we were at a hearing a few months ago and you had asked me a question about that. one thing i wanted to bring up which i didn't then is we really put program managers in terrible positions.
4:49 am
so when we create business cases where a program is underestimated and there isn't enough schedule to get things done and technology is immature we put a program manage anywhere that position and they have to do two things. program to manage the and impart discipline. at the same time they have to defend the program. so what we do with our program managers is not what industry does and we grind really good people up. it's a wonder they take the jobs. >> exactly. thank you so much. >> may i make an operational comment? >> absolutely. >> captain john meyer and his crew have moved aboard they're in the gally board forward operating 50% and the crew is extraordinarily happy with the ship at this point. secretary stackly has already outlined the time line. the warfighter does need the ship and we're pleased with the fact that the crew likes the capability that we're delivering there and the statement referred to that capability. yes, ma'am, absolutely cost
4:50 am
more and is taking long bir we will have that ship delivered with that higher capability by the time it deploys. i would just like to note for the record that the crew is very happy with the technology we're delivering into the warfighter. >> thank you. i will make a closing comment. i have gone way over my time but $2.4 billion is a lot of up armor that could help the guys on the ground as well. we could have saved a lot of arms, legs, lives if we had had that money allocated in our budget as well. thank you. >> thank you. on behalf of the chairman let me recognize senator manchinen. >> thank you. let me say that it's unbelieveable to sit here and list ton this and i'm reminded in 1961 fair well speech of then president eisenhower in the councils of government we must guard against the acquisition of unwarrented influence whether sought or unsought by the military
4:51 am
industrial complex. i would like to know how you're able to do this job and keep from being so frustrated, seeing the recommendations, seeing the forecast that you've put out, and all these years. and knowing that the deficiencies will happen. so what i would ask. has anyone followed those people who have left i think someone mentioned here how many people that were in charge whether it be from the secretary on down? how many have left during the process of some of these acquisitions? and where they have gone to work afterwards. >> i don't know that there's been a comprehensive study. >> how come we always say follow the money and you usually figure out what the problem is. >> yes. i think there's a fair amount of government personnel retiring and moving to industry. >> do they move to the same industry that basically they
4:52 am
were in charge of oversee sng >> well, there are laws about conflict of interest. and they apply to different levels. so they have to abide by that. but many of them do eventually do that. >> from listening to the testimony here there's no repercussion here whatsoever. the last statement was made of secretary stackly. nobody at higher level has every been reprimanded relieved or incomplet tensey but someone at a lower level has. in the private setting back home in west virginia, if we go at home and goes overbudget, you learn from the first one. and definition of insanity is continuing to do the same thing and thinking you would get a different result. you would think sooner or later we would learn. >> these programs take so long. the leadership changes at every level so many times that we're starting over again and the
4:53 am
people in position now don't remember what happened. i will also say i don't think this is a case of bad actors. i think these are people trying to act rationally in the environment. >> i'm not accusing anybody of being intentionally a bad actor. the system the way it's evolved over the years. president eisenhower saw something coming. there was something for him to make that statement. if we operate in world war ii probably he was thinking the way he saw the evolution of the industrial complex military, god help us in world war ii probably what -- i'm saying something stoked his interest saying we've got a problem. be careful. so he had tremendous issues back then knowing we were going down the slippery path. i'm looking at what china is able to do. and if you look at how they're able to advance and jump in
4:54 am
very quickly i'm sure there's other -- they have other ways of acquiring the information they're getting and we have suspicion about that. but still yet there's a process that they're able to do things in a much quicker timeframe. what recommendation would you make? and people that make decisions and people that maybe can change the law and create laws that would help us or prevent this from continuing? g.a.o. we pay no attention to you all it's ashame. that when g.a.o. basically makes a recommendation we owe it to the american people to give you an answer back why we accepted your recommendation or why we don't. it's very simple in myself and former senator coburn tried to get that done. someone has to answer to what you're seeing and we're not doing. what's your recommendation for us to fix the system? >> i actually don't think it's a matter of law recommendation
4:55 am
or telling to do anything. i think it's -- when you're -- your biggest opportunity is when you're approving a new program and you really have to scrutinize that program. so if you really believe in mature technologies before you put them in a program. if you really believe in fly before buy, if you really believe in realistic estimating and scheduling and a program comes up that doesn't measure up, you've got to say no. >> and the g.a.o. found, in 2007 you mentioned this. the ford class aircraft carriers lead ship began construction with an unrealistic business case. you identified that. anybody here or whoever was there at the time did they talk to you or did you give them that information what you saw? >> well, i'll tell you yes in terms of the report. but i believe this is the first hearing the carrier where outside witnesses have been
4:56 am
invited. >> i thank the chairman for that because he's had some great hearings for us. sir, i appreciate all your services. ladies and gentlemen we've got to change. $18 trillion of debt and the way we're climbing and the military is underfunded. but thank you. i would love to meet with you later on. i thank the senator from west virginia for his involvement and his commitment on this issue. senator till liss. >> thank you mr. chair. mr. francis, i think you opened up your statement by saying the same story different program. and you also commentd in your opening statement about this committee and the senate or congress as a whole playing a more aggressive oversight role than we have over recent years. so can you give me some sense
4:57 am
of how much of that is going forward with new programs, how much of that should be applied retro actively a to this subject or any other major project that is we have? what are your recommendations to this committee? >> i would say right now we're kind of in a period where there aren't as many big new programs coming down the pike and that's really your opportunity. i don't know how much you can do on a program that's already through the milestone and under contract without making more of a mess of it. >> maybe just going back i think he used the analogy of seven home runs in the bottom of the ninth with respect to this graphic here. to what extent do we need to go back and say we know i think maybe the twins did it to the tigers? but it's very uncommon. it was widely reported as a
4:58 am
result. what do we need to do with respect to this timeline being realistic that we're going to have a time line that we need to achieve? what do we need to do here to at least not come back and have the same frustrations that senator ernst has we see it we know it's not likely to happen. therefore what should we be doing to set realistic expectations? >> so for something like this i would say and i think the navy has moved the schedule out so far on immigration testing i think you have to make it ok for the navy to come up and say we need to move this schedule and it's going to cost more. that has to be ok. and right now we sort of play this -- we're on egg shells because the navy might not want to come in and say that because they're going to take a beating overen creased costs. so we kind of play -- >> i'm waiting until it happens? >> wait until it happens.
4:59 am
yeah. >> and somebody has been responsible for a lock-term complex projects. that's when people lose their jobs. i think that the thing that we ought to put on the table now is if you come back and explain to us why we're going to miss yoush dates, that becomes our problem that becomes senior leadership's problem in the department. if you wait and ultimately realize or come to us and actually say we were wrong, then somebody else needs to lose their job. it's a matter of whose problem it is. and i'm not citing any one person but it seems like it's obvious that we are going to have to pull a rabbit out of the hat to achieve these dates. somebody owns the responsibility to speak honestly about that and set the right expectations and if they don't then they need to own it. i don't think you disagree. i think going forward because you said it's the same story
5:00 am
different program we do need to come up with some findings of fact before we approve future programs so that we can really have people own this going forward. instead of having it as senator manchin said be the insanity that seems to drive these programs. for the admirals i'm going to ask a general question. first off with respect to china i know we spend a lot of time trying to take the edge out of our quantitative disadvantage say a country like china that's churning out a lot of ships by a qualitative advantage. but as admiral said quantity has a quality of its own. at some point our capabilities may end up being matched by the sheer quantity that
5:01 am
5:02 am
5:03 am
the other reason we built the ford class the anymorites is starting to reach the end of its life. technology changes. the other thing is it was built n an era where people were relatively inexpensive. o from a total life cycle cost people make up 40% of the cost. so it's pretty clear as we look forward not only do we need the war fighting capability but we have to drive into the ship into the 50 years the most important thing we need to do to call people off the ship. that required a complete redesign. some of the things you're seeing, for instance, not only do they provide operational capability but also a significant reduction. but we're going to take 663 sailors off ford compared to
5:04 am
anymorites about 1200 when you compare the air wing. the net result is over 50 years the cost to buy that ship, own it, operate it will be about $40 billion less than today. >> well, i must say all those things that both admirals pointed out are undeniably accurate. but those numbers there are totally unacceptable. and i hope you realize that. i would like to point out that senator kaine has been more involved in this situation regarding this carrier than any member of this committee. he has been very constructive. he's been incredibly helpful in informing this committee. and he is a strong advocate for the men and women who are doing great work in the construction of these aircraft care yrs and arguably one of the finest ship yards in the world.
5:05 am
>> thank you mr. chairman for your comments about the ship yard. i'm proud to represent the thousands of ship builders who manufacture the largest and most complicated items on planet earth. many from north carolina and virginia who work at the shipyard. and they didn't make the decision about putting all the new technologies on the first in class of theford class. they also didn't develop the weapons systems and other system that is have been complicated. they're working to install them. i've seen the work under way. i saw the corps inserted into the ship one day. i've seen the navy take control of the ship and n recent months. and they are very excited about it. a couple of items. cost overruns. and i agree that there's very systemic issues that are demonstrated that we need to tackle. cost overruns. i would say that a lot of this is less overrun than poor cost estimation. i think you unpack what cost
5:06 am
overruns are. poor cost estimation. before 2010, when the navy was talking about their cost estimate on this project, to this committee and others, repeatedly the nea said that their competence level in the cost estimate was less than 50% orn or even in some cases less than 40%. isn't that correct? >> yes, sir. >> and i gatsdzthear that was because first in class and the addition of all these untried technological systems as mandated by a previous sec deaf, that was one of the reasons that the competence level was low. is that right? >> yes, sir. >> now. let me talk about first in class history because you talked about this is a similar problem but just a new example. i think it was eric labbed who did the study this summer where he looked at navy acquisition programs and he looked at first in class over a variety of programs. and he basically concluded i
5:07 am
think that as a general matter first in class acquisitions in ship building can be 10, 20, 30, 40% higher than the estimate that the nea has begun with. isn't that essentially true? >> yes, senator. i think in my statement we have a list of the most recent first in class and the average cost increase is 28%. >> so i'm not going to defend 23% as better than an average. but to put it in context this isn't that unusual. but maybe the thing that is more important is what happens after first in class. on the in class cruiser there's a lot of roblems. that program ended up being significantly improved as it moved along.
5:08 am
the destroyer was called the navy's billion dollar hole in the water another example of the navy driving itself to the poor house in a cad lark -- that was the "washington post." but that program significantly improved after the first in class. one that i really love is the virginia class submarine that's done in tandem between the shipyard in newport news and electric, that's turned into a successful program but wouldn't you agree the first in class in that had some significant challenges and cost overestimation problems? have i given the history correct? >> sir, you're absolutely correct. one important thing to keep sight of is in each case unlike other major weapons systems programs there is not a proto type ship. the lead ship is the proto type. it is the first opportunity to bring these complex systems together, integrate tests, and
5:09 am
there are uncertainties, unknowables and risks that get brought to that ship in production when it is most costly to find and fix those issues. >> i love the tried and buy it. for some weapons systems that's really what you do. you proto type it buy it. but for a ship of this size the proto type is the actual and that's why you often see difference. you talked about the changing in the contracting mechanics us to 79 8 as a cost pl as a fixed cost. and i'm assuming 80 will be fixed cost as well. >> yes, sir. both 79 and 80 will be fixed price contracts. > and then finally on just the -- the question about the ons savings. we talk about the cost of
5:10 am
constructing. the cost of operating is even larger because they have such a long life. and i gather that one of the main design features of this is to putt in physical desin to dramatically reduce the number of sailors and then drop the personnel cost by about $4 billion. now, i credit it was either dr. gilmore or france sess who said there's a projected savings in personnel cost but we haven't achieved it yet. we have to see whether that's accurate. there may be some challenges that would reduce that but i do know that bringsing down the number of personnel is one of the main advances over the anymorites design that's part of this ford class and i think the committee should stay on you all, we should all stay on it to make sure that's achieved. i strongly support the chair's acquisition reform strategy. what we did in this year's nda was important but i certainly see that as just a down payment on what we will be doing going
5:11 am
forward. i think it's important that we do it. >> can i make a couple comments. >> please. >> first on the contract for the 79, the current contract is fixed price. that covers about 45% of the construction cost. 55% has already been paid for under a cost plus contract. keep that in mind. and then i think you're exactly right on the first of class of any weapons system we seem to have a lot of trouble with. then later on we kind of get comfortable with the fact that we've worked out the problems and everything looks good and it creates a little complacency. so i think a challenge for us is if we're repeatedly having trouble with first article -- and it's not just navy -- what is it that we can do in term of estimating and risk analysis so we're not making those same estimating errors every time? >> could i add to that,
5:12 am
senator? i think it's important this committee has actually received from the director of cape information package that showed that since the immementation that the cost estimating techniques were improved because we were given access to information and data right directly from contractors. and it shows that the disparate distance between the service cost positions and the independence cost positions has gone from a medium over 6% to less than 2% and 3% which is in the margin of error. so over the last period of time what the senator points out is exactly what needs to be done to improve our future understanding of how costs are grown. >> but isn't it also true that have had a n the 78 significant effect on the cost of cbn 79? >> yes, sir. there's the program planned for he carriers 78, 79, and 80 has
5:13 am
been stretched out. so as i described earlier 78 was going to be an 06 carrier that became 07 then 08. in the 2008 the navy was authorized to procure 78, 79 and 80 on four year centers which is consistent with 12 carrier navy. the decision was subsequently made by department of defense that we are going to stretch that out to five-year centers. so now the 79 which was going to be an earlier carrier is not put under contract until 2013 budget then the 0 was bumped further so the program has been stretched out that's brought more cost to the program. >> senator ayotte. >> thank you, chairman. i want to thank all of you. i just wanted to say that i think one of the challenges you
5:14 am
referenced this in your testimony is here we sit here today billions of dollars of overrun and people are very frustrated by it. and you cited also that the jsf program, the f-22, the lit torl combat ship they were actually worse and this was a typical acquisition outcome. so here's the challenge. we've got to change this dynamic because we've had the leaders of all of our military rightly come in here and testify about the impact of sequestration. and the fact that we're going to diminish the size of our fleet that we need more ships, more attack submarines more ground troops, obviously more fighters and making sure that we also have the training of course for our men and women in uniform. and then my constituents look
5:15 am
at these billions of dollars of overruns that have been multiple examples of it and look at us and say why aren't you dealing with that? if we're going to give you more money then we need you to deal with that. so all of us who care very deeply for making sure that we do what needs to be done to defend this great nation, this is an issue that we -- it's got to go from being the bottom priority to a top priority. so one question i would ask all of you whoever is the best secretary stackly, secretary mcfarland, whoever is best to answer this. you mentioned aligning responsibility accountability and decision making. how are we rewarding good acquisition behavior within the pentagon? in other words, if you are doing a good job how are you rewarded? and in turn ings one of the questions you're hearing from all of suss how are those being held accountable not just at
5:16 am
the captain level that we've heard about today but at the highest levels that this has to be a priority for all of us if we want to make sure that our men and women in uniform have what they need and that we make this case to the american people about how important this is? so whoever is best to field that. but i think that's the big question here. we're clearly not aligned in accountability, priority, and how we're rewarding the people who are doing a good job and also holding accountable the people who aren't doing a good job. and i'm sure that's demoralizing to the people who are doing a good job. >> i think your points are very well made. i'm not sure we reward our program managers very well. i think the only thing that i can see from my experience is you promote them. in terms of holding folks accountable, when we see a clear connection between what they did and their outcome, we do retire them or move them.
5:17 am
both civilian and military. beyond that the incentive structure that you're referring to is not clear and it's not adequate and it ties to what the earlier chairman and the ranking member talked about is where those decisions with made and what paul talked about in terms of how is it that the culture and how the decisions are directed into a program manager relates to their ability to perform. >> one thing i would say is that also as leaders if you have got someone you've got to let go at the captain level the leader needs to be held accountable also. because any one of us if our team does something we're ultimately responsible as the leaders. and i think that coming from the top is so critical of making this a priority. i had a specific question also about what senator mccain referenced plfment francis
5:18 am
mentioning the kc-46 program and how the contractor has absorbed the cost overruns. wouldn't it make sense for all acquisition production programs to be designed so that the contractor absorbs the cost overruns for production? >> if i could, senator. i can it's important to understand the risks. sometimes the threat drives us to take risks because we need to. and when the risks aren't clear, that cost sharing between us and the contractor has to be considered. when we ask for a fixed price contract when the risks are high the contractor, in order to get their corporate headquarters to agree upon working in that contract, they add that risk related to cost. >> so i understand that issue with regard to rnd. but what i'm talking about is production costs. >> i agree with you in production. >> are we doing that
5:19 am
consistently across the board in production? >> we took a look at our contracts across the services and indeed yes. >> let me make one point regarding that. and we talked about ship building. the prototype historicically the lead ship of a new class has been a cost plus ship. over the last frankly we've been trying to drive down the number of cost plus ships in our program and today across the department of navy we have two cost plus ships in production one of those is the cbn 78. >> my time is up but i also will submit a question for the record that concerns me. as we looked at the 78 cost growth i would like to understand how we look at the ohio class submarine replacement program what lessons we've learned from this so that we don't go down the same road with the ohio class which is obviously very important for the nation. >> can i jump in on the time
5:20 am
you don't have left? >> of course. with the chairman's latitude. how is that. >> thank you. on your right on production contracts, they should be fixed priced. but there's still times ships aside there's still some contracts that are cost plus going into low rate production. and you do have to match the risks you're taking with the contracts. so good contract can't save a bad program. so if the risks are high, i don't necessarily fault the contract type. i raise the question why are we going into production if we're not done with development yet? >> well, if it's a bad program we shouldn't be investing in it in the first place. isn't that the fundamental question? >> yes. or if it's just not ready to take the next step. and then on your first point, on program managers and people held accountable, i think it's a good philosophical question about accountable for what? what constitutes success? so if i'm a program manager and
5:21 am
i'm trying to get my program through the next milestone and i do that, and then there's a cost increase, what am i going to be rated on? getting it through the next milestone or the cost increase? and it's going to be the former. if you can support the program and get it moving, that's what you're mainly accountable for. >> that's a problem because if it cost youse a lot more and you're putting it through and you get it on time that's not meet yourg target. so people need to be held accountedable for both. otherwise this is where we end up with the billions of dollars in overruns. thank you. >> senator hirno. >> thank you, mr. chairman. i know that the department has undertaken headquarters reduction and congress has reiterate it had need to look at reducing headquarters positions for efficiencies and other savings. while we all want to reduce waste and inefficiency, i would urge the department to look at
5:22 am
possible headquarters reduction targets on a case by case basis and to make informed decisions keeping in mind that cuts today can come back to cost much more in the long term than we get in the short term savings. the acquisition workforce is vital to ensuring that our acquisition programs such as the forward class carrier are managed and lead to successful outcomes so that our men and women in uniform are given the tools that they need to effectively carry out their missions. we have to ensure that we are able to recruit and retain quality acquisition workforce if we are to be successful in defense acquisitions. if we have acquisition teams that are understaffed, undertrained or too inexperienced we cannot expect to have good results in our acquisition programs. as described as secretary mcfarland's testimony today we cut the d.o.d. acquisition workforce by roughly 57% during economy drives of the late 1990ings and early 2000s.
5:23 am
i believe that these deep reductions contributed directly to a large number of the problems that d.o.d. has had in major acquisition programs over the last two decades. and i agree that congress has an important oversight role to play on acquisitions. however, at the start i want to know that our acquisition workforce can perform and that we can rely on the analyses and processes of our acquisition team before a program is recommended. therefore, when we look to to ement mandatory cuts headquarters we should consider the potential long-term effects on our acquisition programs among of course other programs. so for secretary mcfarlnd what is your assessment of the health of the acquisition workforce? especially as we deal with these very complicated acquisition that is we are -- such as the ford class. >> senator, first, thank you. this is such a human endeavor.
5:24 am
that is the principle understanding of the underlying problems that we have in inside of acquisition is to ensure that our workforce is appropriately trained and experienced to do these jobs. core 6 we had 622,000 acquisition people. by the time frame of this program in 78 was conceived and 96 through 2002, we had reduced that workforce to less than 300,000 people. this committee and congress in general has provided us the defense acquisition workforce development fund that has allowed us to regrow retrain and reeducate about 8,000 to 10,000 people to bring on board since then. that has been a critical improvement. the majority of our workforce is imminent to retirement. the workforce that we do have is predominantly younger and not necessarily in age but rather in experience. and this program and these capabilities that we're
5:25 am
discussing were inherently bread by people that may not have had the adequate acquisition experience or understanding of the business case that needed to be excuted here. so i would say that we are very fragile right now as the best way to say it. these people are working very hard they're very loyal they're patriotic people they don't get very well paid they get a lot of abuse in the press. there's also an opportunity to forget what they have done that is done well like the jltb program that has actually been put together under the principles of the better buying power initiatives. and i can really commend the services for that program. and others that are doing much better by having that disciplined approach. the only way we're going to pro tect our future is to invest in that core capability. >> would you like to comment also? >> ma'am, i think i will add just one comment. back in may of 2014, chairman
5:26 am
mccain and senator levin signed out a letter soliciting inputs from a number of individuals and organizations regarding what do we need to do to improve this acquisition system? and i was fortunate enough to have the opportunity to respond after giving it much thought first and foremost my concern and conclusion was that programs that succeed -- succeed because you've got a highly talented experienced team in place that is able to overcome work through in and around this very dense difficult system that we've got and at the same time master the technical details and programic oversight to deliver complex weapons systems. programs that fail quite often fail because of not having the same attributes in terms of the acquisition workforce team. so first and foremost we've got to give us a tools to attract retain those professionals to
5:27 am
get those jobs done. >> i emphasize how important it is to have an acquisition team that we can rely upon because these are very complicated systems and programs, and it would be very difficult for congress to be the first line in terms of analyzing the eefcassies and the reliability, et cetera. of these programs. so i expect our acquisition people to do that. and therefore thank you very much. >> secretary carter's hearing for confirmation i showed a chart of $40 billion. it was spent on programs that never became reality. that is not an acceptable system or situation. we value the men and women who work in this business. but these problems are of such
5:28 am
magnitude in the view of most members of this committee that we can't lose sight of the fact of the system is badly broken. senator sullivan. >> thank you, mr. chairman and thank you for your leadership on this issue in terms of oversight. critically important oversight of this committee. i'm not sure if this question has been asked but maybe i'll ask it. who is responsible? who is responsible? who has kind of raised their hand and said this cost overrun is my spobblet? i accept it? >> sir i will tell you that today i am responsible. you see the gentlemen here at the table for elements of the program that all come together but as the execute 85 as i stated, i assume responsibility for this program and the decisions that i had the opportunity to make as we excute. >> secretary mcfarland. >> sir, the navy is responsible
5:29 am
-- >> i'm not talking about an organization. that's very amore fuss. i'm talking about people. individuals. >> i believe we could have done much better in preparing and advocating for the right aspects of this program to be conducted at the beginning and throughout its execution. >> so who is responsible, in your view? >> the department. not a good answer. not something -- >> no. it's a ridiculous answer. ok? is o -- in your view, who responsible? part of the issue here is that the responsibility seems to be placed -- i mean, secretary stackly, i appreciate your statement. that's up front. secretary mcfarland i'm asking the same question of you. who is responsible? i'm talking about individuals. that's how we fix it. we can't blame it on the navy. >> sir, i will take absolute responsibility for not having
5:30 am
done the correct things in terms of helping this program along. >> so who is responsible? >> then i would say myself, sir. >> ok. admiral moore, admiral gadice, look at your bio's, very impressive in terms of your military careers. when you get assigned to be the bill et of a program manager as a senior flag officer in the united states navy, is that something that when that happened you celebrated? is that something you're like, oh, geez, i mean, how is your job as uniform military officers as viewed in the navy? is that part of the issue here? >> well, other than i got to spebbed my 16th consecutive year in washington, d.c. if i had taken the job. >> i feel for you. >> it's an honor. >> but i mean, is that a career enhancer to successfully
5:31 am
complete a tour that's obviously filled with land mines or is that something you try to avoid? what i'm getting at is do we have our most ambitious top rated officers trying to get these jobs or are they trying to avoid them? and is that part of the problem? >> sir, i believe this is the best job in the navy. i was honored to be asked by secretary stackly to take the job. i think most of us sitting or anybody sitting at this table at our level will tell you that we want the challenges. and we're not going to shy away from the responsibility that is go with this job. i'm ultimately accountable for this program as secretary stackly, i accept that responsibility. i want the tough jobs. i was glad to take it. i think we've made strides on 78. nobody is happy with the cost overruns we've had on 78. i think we've done significantly better on 679. i think we're on a good path going forward. but to your basic question, good people want these jobs. they're tough jobs.
5:32 am
i think you're going to continue to get the right people in these jobs going forward. >> and i know you see the frustration from the committee i think snasht ernst did a very good job of articulating that in terms of -- we talk about dollar cost bus what we're really talking about is opportunity costs in regard to the defense of our nation. so just one of these cost overruns on one of these carriers could fund a brigade combat team in the army for ten years. that's a really important issue. and the army wants to cut 40,000 troops right now. so strategically it just doesn't seem to make sense. let me ask a quick question following up on senator ayotte's comments. o you need statutory authority to have the responsibility of cost overruns be borne by the contractor and not the
5:33 am
absolutely. >> we're dealing with first in class products. we're dealing with new
5:34 am
products. and you've mentioned two terms fly before you buy and mature technologies. i understand that. but the problem is we're building a product here that's supposed to have a 50 year life. and if we build it with fully mature and fly before you buy technologies it's going to be obsolete the day it enters the water. and we're talking about a qualitative technological edge. so i really think -- and senator kaine pointed out we're essentially building prote types. there's no way to do a proto type if that first mcintosh was a proto type that we could sit on a desk but we can't build a proto type of an aircraft carrier. so -- and you've identified it. how do we deal with the first in class issue? and maybe it's more reals stick estimates at the beginning. maybe it's more realistic estimates of the time. but to simply say there's an
5:35 am
overrun here, as senator kaine pointed out, if the estimates at the beginning had been more realistic there would be no overrun. it would have been what was estimated. so how do we deal with? it's a risk and cost balance it seems to me. and in order to build the highest technology, most advanced weapons system, we're going to have to take risks in terms of being sure that that technology is the most advanced possible when that ship launches. talk to me about what you identified i think properly. this isn't an overall procurement problem of all of the military but the fact it seems to happen in every branch on every weapons system, whether it's the f-35 or this or other ships or other weapons systems, tanks, you name it. how do we deal with this first in class issue? >> well, i think there's a way
5:36 am
to take risks. so we need to take them. our position has been let's take more risks in science and technology before we get into acquisition. that takes money. and we're kind of stingy about money before we get into a program. >> would it be accurate to say that some of these ships, some of these systems -- this is an r&d project. this is r&d on the hook. >> yes. and so we talked earlier about off ramps. i think shawn talked about them. if you're going to take a risk, let's say we're taking a risk. and we've got an off ramp. we tend not to do that. we tend to bet that this was going to come out just the way that we say. and if we look at the original plan for the 78, these systems are going to get run out on land based testing before we got on the ship. but we were too optimistic for
5:37 am
the schedule taking that risk. so myself personally, i'm not terribly concerned about the types of problems we're having on those systems. it's when and where we're discovering them. that's the problem. so i think there's a way to take risk to take it more intelligently. again, i come back to the acquisition culture. the culture here is to say there is no risk, that we can do it for low cost. if you come in and say it's going to cost 13 billion maybe you'll get told no. so you can't put that on the table. so somehow our culture has to change so we can say it's ok to take a risk and here's how we're going to do it. >> we're talking about a class of ships we're building three of them. so you don't have 50 or 60 to spread those essentially r&d costs over. the ddg 51 i think is an example of that it's now
5:38 am
cheaper than in real dollars than i believe than it was back in 1986. it had a whole lot of problems now it's the main stay of the navy. so i think -- again i think this is a very important subject. i don't mean to sugar coat it. we need to focus on it. but we need to understand the context somewhat and really focus on the real problem which seems to be how do we deal with the quantitative risk. i spent two hours not long ago in a classified briefing the same kinds of issues and trying to hammer about how do we do the contracts who takes the risks. and but this is a tough problem when you're talking about trying to build the most technologically advanced weapons system in the world. and senator manchin mentioned the chinese they're doing pretty well by stealing our intellectual property. he alleged, i alleged. but that's one way to short circuit the r&d.
5:39 am
but i hope you all -- madam secretary you've done a lot of thinking about this. i think it would be very helpful to present us with some thinking about how we deal with the first in class problem. because that's what we're talking about across the government. admiral. >> if i can offer -- since the board comflex and the technology risk perspective just white washing first in class, that is what technologies do you choose to put into first of class. the original plan was 77 had part of it, all pushed into one class. we talked about i think ranking member reed talked about the enterprise surveillance radar project that we're putting in the 79. that's a management of risk because that radar is a nondevelopmental solution. we created requirements that looks at what industry has now to reduce the risk of technology and development on time and schedule.
5:40 am
the p-8 program brand new submarine aircraft was put on a cost commercial system that's the boeing 7237 aircraft. we reduce the risk of integration into an air frame something already proven. several of our weapons programs, we use it had back end motor with a brand new seeker on the front very, very capable. and when the seek ser good we do the back end motor later on. so the type of risk that you take on in the first of class is key. if we choose to do a full developmental first of class like the joint strike fighter that is a revolutionry weapons system that is better than any aircraft in the world. there's a lot of risk there, sir. and we're realizing that risk now. we talked about the ford. that was revolutionary between the anymorites and the ford. so i would submit that mr. francis' comments are exactly on the mark. we have to look clearly at the risk that we have. if you're first in class is revolutionary and you don't do
5:41 am
the thing that is you're talking about for technology you're going to have a cost delivery mismatch you're going to have to deal with later on sir. and we look at that risk. >> if i may. just add. because senator ayotte brought up the ohio. you're asking you're just spot on. it's the next big thing coming our way in terms of a first of class. we're talking about a program that will be providing reliability secure certain sea based strategic deterrence into the 2080s. how do you design and develop the capabilities that are going on the boat in the front end, deliver on schedule so she could be on deployment on schedule by 2031 and then throughout its life remain that secure sea based strategic? >> still be an effective weapons system 30 years from now. >> yes.
5:42 am
so we're not going to go big bang. what do we need to do on the ohio replacement that we don't already do on ohio? >> right now we have a very effective, high performing strategic program in terms of the weapons system itself. we're not going to develop a weapons system. 're going to port over the current system in its current state of technology on to the hull. the virginia class very effective combat systems sensors, communication platform, we're going to pour it over that technologies on to the ohio replacement hull. the advances that we need to make are, in terms of stealth and surviveability of the replacement hull for the next half century, that's where our focus is in terms of development and design. the way we're going about this is challenging the rirmes. we have to get the requirements up front. getting them right doesn't just mean what does the operator need but what is technically feasible, what are the risks.
5:43 am
make sure you have a development program that works those risk soss everybody understands before you're cutting steel. and then have the off ramps that we discussed. so we've got that laid out. that's a 1e9 boat that we're sitting here today doing those developments managing -- 20 21 excuse me. that we're managing closely today. and then assessing the risk each step along the way visibly for the congress, for the department of defense with industry to ensure that each step along the way we have wire making the right decisions and we don't find ourselves where we are today with delay and the cost growth that we're seeing. >> admiral, when yo -- your time has expired. when you use the joint strike fighter as a success story, sir, you have lost the connection between the military and this committee.
5:44 am
the most expensive longest cost and largest cost overrun first trillion dollar weapons system in history and you're using that as a success story, sir, you have lost connection with the members of this committee and those of us who have been involved in this fiasco for a decade. mr. francis you've got to respond to some of this. we are now being painted a picture everything is fine. >> i think that this is the bipe product again of culture and the long time line. so when programs get through the problems, we fall back on, wow, that's so much better than what we have. but we've forgotten the cost and the opportunity costs it took to get there. so ings we can agree that the system produces tremendous weapons systems but they cost way more take much lofpker.
5:45 am
we're giving up things along the way but we don't know what those are. that's not a pattern we want to repeat. we want to get it right the first time. >> yust for the record, sir, i did not intend to use the joint striker as a success story as much as innovate that technology is a challenge, sir. >> innovative technologies in silicon valley reduce costs. innovative technologies apparently in the department of defense increase costs. senator cotton. >> thank you. i know that we've gone over a lot of the details of this program so i won't rehash those. but i do in the spirit of inquiry and problem solving moving ahead in the future have a couple simple questions that i want to ask. mr. francis, i will start with you. has the neaver ever delivered a ship under budget and on time? >> i don't know if i can answer that for history. i want to say in the recent one
5:46 am
that is we've looked at that hasn't happened. but probably mr. stackly has better data on that. the ones we've looked at. >> you say a ship. but absolutely yes we do it consistently. i think what you want to get at is a lead ship since we spend so much of our time discussing lead ship. and the answer again is yes we have. that's when we have been very measured in terms of the risk that is we have been carried into those lead ships. as we move forward, when we look at the lead ships coming our way right now the first one is going to be the taox which is in the 2016 budget. we're going to leverage existing technologies and design to minimize the risk on that. that will be a fixed price program. the next one after that will be the next amfib program the lxr. we have made the decision to mitigate minimize those risks to ensure we the cost of the needs and afford and rely upon.
5:47 am
we'll use the hull form which is technology and capability that we understand and support it is mission and then we're just going to deal with those changes to the mission out of necessary that are -- for the changes to that platform. >> so those are ships in the future though. retrospectively, what is the lead ship that the navy delivered under budget? >> i don't want to oversimplify this but the last that we delivered was the mobile landing platform. that delivered on schedule, underbudget. >> ok. secretary do you have anything to add to this question? >> no, sir. i would add one thing different though. i think the underlying premise in term of what we're having as a discussion doesn't go specific to the ship for the first in class but to that culture that we discussed earlier. >> and to be clear i'm asking this not just about the forward class carrier but all these major capital investments that in particular our navy and our air force have to make. if they asked me the same thing
5:48 am
about airplanes but we have to replace our ballistic missile submarines and the air force is on the verge of replacing its bomber. so the reason i ask this question, have we done it in the past even though it's been rarer than overbudget and delay programs, what are the features or the best practices or the cumentral conditions that allowed a program to be delivered on time and under budget? >> i would like to bring forward a list of programs that have come in on schedule and performance, and also in terms of the culture i think that was adequately discuss bid the chairman and ranking member and i think the table here there are thing that is can be done to improve things like bureaucracy and things like overhead. i think the other piece that you're getting at in terms of what did we learn, one of the attributes of our new implementation and the better buying powers is taking lessons that come from g.a.o., from the d.o.d., and incorporate them
5:49 am
very stepwise and disciplined into the system to work to see these improvements and culture into our workforce for the longs term. we've seen as part of the performance report that is we started three years ago moderate improvement decrease of the nonrecurring and decrease performance of our contracting although we can improve in incentives. we have been trying to measure what we do and findings those whether we trace to acquisition reform, policies statutes to work as we had done with congress for the upcoming ndaa's and legislation. we believe we need to get to the heart of the matter, which is the data that points us to what we can do to improve. >> mr. francis do you have any? >> yes, senator. one of the classic cases of success story is we have 16 fighter. and i know that's -- it's old but the story, the lessons are
5:50 am
still applicable. so that was a low cost alternative to the f-15s so the requirements were kept low. we had five international partners. and they all have to agreement to any requirements changes. have the effect of keeping the requirements down. and we had a contractor at the time that was in very difficult financial straits. so they couldn't underbid and hope to get well later. so that combination of things had the effect of changing the culture for that program. there's some other examples i'm trying to think of the shadow ump av that the army developed also went quite well. nd again in that case we had both they had requirements -- the head of requirements in the army and acquisition actually drove that program and kept it in check. suggests that the success stories have been
5:51 am
the bipe product of exceptional circumstances and not the result of normal circumstances. so the take away here is how do replicate that, how to make those circumstances that culture normal for most acquisitions. >> the uniformed officers have anything to add? >> yes, sir. i was the hornet super hornet and growler program manager. that might change command -- at my change of command i thought super hornet was the most successful program in the history of d.o.d. two years later i found that i was wrong. because the 18 g growler beat the ef super hornet. and i would argue that that's normal acquisition. and what you see is an aberration. over there, is an aberration. i have a $47 billion portfolio with those platforms and
5:52 am
includes the hawkeye. it includes the next generation jammer. very successful programs. that right there is the unfolding of one agonizing technical discovery after another and add its root, since senator mccain asked that question, is we didn't do an adequate td. let me give some examples. we did a risk reduction effort before signing the production contract and we spent $32 2 billion. the act has passed in 2009 for next generation jammer before we go to milestone b the department of defense will have spent $622 million for tech mat and tech development for next generation jammer. what that means is you're going to have a solid technical baseline and a solid technical or cost estimate going into milestone b. i feel pretty confident about those execution of those programs.
5:53 am
.e spent a paltry $29 million we -- everything we discord then we could have discovered sooner. we're at a point in the program where we're beating back all the discovery, we're beating back all the design changes. the secretary said before we're now into software and tweaking the software. that's where we're at with aeg. i wish we would done td as we did and what we did -- we just didn't do it. in 2004, by the way, normal acquisition, we did propose that. we did propose a 5-year component advanced program. followed by a five-year development program. and it was deemed as too costly and too lengthy. well, here we are. we should have done that in the first place but the leadership said no because we were in to
5:54 am
transformation pushing technology to the left. but that's the consequences of those decisions that were made back in 2004 which by the way is all documented in 2004 acquisition strategy. thank you. >> thank you for that perspective. i would -- if you could, follow up on providing examples of where systems have succeeded. they've been a success story, they come in under budget, they come in on time. the headline grabbers are like this one that don't do that. but i do think that we have a lot of lessons to learn not just on oversight of current or past products but what's going to happen in the future with the platforms and the weapons systems that our sailors soldiers airmen marines need to fight. so that would be very helpful for me and for the rest of the committee i'm sure thank you very much. >> let me recognize senator kaine he has one question. >> thank you mr. chair.
5:55 am
super questions by senator cotton. in this program going back to a point i asked earlier, i want to get your opinions on the role we should play in terms of oversight. in this program the cost estimates before 2010 were coming with a confidence factor of less than 50% or in one instance less than 40%. if we're being asked to make a decision about a significant acquisition and we're given a cost estimate but the navy or whatever the service branch says and our confidence on this cost is less than 50, to me that suggests probably some questionable confidence on cost but also on operational risks. because the reason you have a question about cost in connection with operational uncertainty as well, should we just say come back to us when you're at 5 or 60 if there's that much unserpty about a cost estimate should we basically push you to do more work before we give a green light? >> sir, i spend a lot of time
5:56 am
with the cost estimators and program managers and i explain the cost estimate is not the answer. the cost estimate is information and you hit on two things. the cost estimate and the percent confidence. in fact, the estimators come up with a range of thing that is could influence the final cost. what i want the program management team and the cost estimators to do is in that understand what are the risks. if today the confidence is 40% what are the risk that is we have to drive out of the program to get it up to the level that we're ready to put budget down on ready to go to contract ready to cut steel? so it's not just the cost estimate. it's the next two or three levels below that that the estimators are pointing at that woo just like we've been discussing here all parts of the carrier program that we need to retire before we go to contract. before we go to congress and say we need authorization to go forward on this major


info Stream Only

Uploaded by TV Archive on