From Defense News: http://www.defensenews.com/story.php?i=3935896&c=AME&s=SEA
Note the italicised comments regarding the LCS and the removal of guns from the DDG 1000…
As the Under Secretary of Defense for Acquisition, Technology and Logistics (AT&L), John Young oversees the vast panoply of the Pentagon’s weapons-buying programs. While he’s held other Defense-related positions, he was previously the Navy’s top acquisition official. In that job he frequently advocated for and vigorously defended what was then called the DD(X) destroyer program, now known as the DDG 1000 Zumwalt-class advanced destroyer.
Young still strongly believes in the new ship, even as the Navy seeks to “truncate” the number it buys from seven ships to three and return to building Arleigh Burke DDG 51-class Aegis destroyers, which the Navy leadership claims are needed to combat new threats like ballistic missiles that the DDG 1000s weren’t designed to defeat.
A memorandum Young wrote on Jan. 26 recently was leaked to the press. In the memo, Young examined a range of funding options for Navy surface ships, specifically the DDG 1000, DDG 51 and a new, as-yet-undefined ship called the Future Surface Combatant (FSC). The memo contained various price formulations, including data that showed how truncation affected the cost of the DDG 1000 from its 2005 baseline price – figured at a total of 10 ships – to the currently proposed three ships.
Among the figures listed is a box showing how the total cost of the lead ship, including all the research and development costs, was $3.1 billion if figured for 10 ships, but if spread over only three ships the program acquisition cost would hit nearly $6 billion. While that figure is not a reflection of cost growth, the change would automatically trigger a Nunn-McCurdy breach and require the program to be recertified by the Pentagon as essential to the national defense.
Young, who has been asked by Defense Secretary Robert Gates to remain in the AT&L position until a successor is chosen, spoke with a group of reporters Feb. 5 at the Pentagon about his frustrations with reporting on the memo and the public discussion of the DDG 1000 program. While providing an explanation of the figures in the leaked memo, he also gave what amounted to a near-soliloquy on the DDG 1000 and the controversies surrounding it. Here is an edited version of what he said.
“The first thing I would do is correct some numbers – everybody wants to talk about DD(X) costs and DDG 51. There’s procurement acquisition cost, which takes all the money spent on the program, including the development, versus the average procurement unit cost.
“The average procurement unit cost for the lead DDG 1000 is about $3.3 billion. But the lead ship carries the design cost, the costs to produce the production drawings and implement the process in the factory. The ship itself is estimated to cost about $2.5 billion – and then on [with] the learning curve the costs would come down. That’s obviously if you buy in quantities. If you don’t buy quantities, you don’t get down the learning curve, and you also have very high costs of the ship when you divide the development cost into a small number [of ships]. And that’s what I think is inaccurately reported and leaves the wrong impression. There are very few things that we look at in those terms.
“It’s the nature of shipbuilding. With most programs – aircraft programs, other programs – we pay for the production drawings and production process in research and development. Shipbuilding is unique – we pay for the production process and drawings in the procurement of the lead ship.
“You take that out, DD(X) is about $2.5 billion and projected to come down to $2.3, 2.2 billion.
“For the record, restarting the DDG  program, it’s estimated that the lead ship in fiscal 2010 could cost $2.3 billion. And it’s estimated if we bought two ships in 2011, which is at least in one budget draft, those ships would be $1.7 billion apiece. …
“The discussion the [Navy] Department needs to have is if DDG 51s at one a year are $2.1 billion, and DDG 1000s at one ship a year are $2.3 billion, would I pay $200 million more for stealth; an X-band radar – because DDG 51 can’t carry both an X- and an S-band, DDG 1000 carries both; an acoustically quiet ship, which gives you some protection against most threats; a magnetically quiet ship, which gives protection against mines and those threats? I don’t the answers to these questions. I just know there’s a difference in capability and a difference in price, and you need to do a warfighting analysis, make some decisions that inform you about whether you would pay more or pay less.
“I would tell you, for example, that X-band radar is very important if you’re going to operate in a near-shore, littoral environment. That’s why that ship (DDG 1000) has an X-band, because it was supposed to operate near shore and be able to work in an area where land masses cause clutter in your radar, and X-bands are better at dealing with clutter.
“Also important to this discussion is that [the DDG 1000], because it could operate in a closer-to-shore environment and provide air defense capability, was intended, always in the strategy, to provide air defense capability for the littoral combat ship.
“If you stop building DDG 1000s and you have a DDG 51 that really doesn’t have that X-band and isn’t intended to operate close to the shoreline and in that cluttered environment, it’s not clear how you provide air protection for the littoral combat ship (LCS).
“So there, you’ve got to ask yourself what the strategy is that has us wanting to buy 55 LCSs, which don’t have any air self-defense capability, and I don’t really have a ship that helps provide the air cover for that ship. Because when [the LCS] was envisioned by [former Chief of Naval Operations] Adm. [Vern] Clark and others, that was the strategy, the way it would hang together.”
Young recently visited the shipyard of General Dynamics Bath Iron Works in Bath, Maine, which is set to begin construction of the first DDG 1000. During the visit, Young was shown the computer graphics and plans to build the new ships.
“The design of DDG 1000 is near-complete, so for the first time, we’ve actually designed the ship before we’ve started building it. The design of the ship lets people sit through a computer simulation of the ship’s assembly. Bath’s mantra is that they want to have built this ship dozens of times in the computer tool, so that the first time they build it is not really like the first time and the ship’s not like a lead ship. And they’ve already built the first prototypical modules and proven to themselves that they can do better than lead ship performance on the ship. …
“Right now I would tell you, everything I can see, there’s no basis for any projection that says this ship is going to cost five or six or seven billion dollars. I appeal to you to stop printing that kind of stuff and let us all work off of facts. …
“Both on the LPD 17 [San Antonio amphibious ships] and on LCS, we essentially started building the ships without final designs and then we were changing the designs as we went. And we didn’t have the quality of this design tool. …
“In DDG 1000, things have gone well. This is a development program that has gone essentially perfectly to budget and schedule. In a world where frequently stories are written about programs that aren’t properly developed, this program – because it had engineering development models, essentially prototypes of the key subsystems, and used the computer-aid design tool – has gone extremely well.
“And every evidence is the ship will build for these prices. … ”
Young then addressed the question of how far – and for how much – the DDG 51 and 1000 designs can be developed. He called proponents of increased DDG 51 construction members of “the church of DDG 51.”
“I see a lot of press about 51s versus 1000s, which I don’t want to get into too far. But DDG 1000 was designed with a radar that you can, solely by putting in more transmit/receive modules, give it significantly more radar capability at a modest cost, just by populating that system.
“There are a lot of reports that you can upgrade 51s, but I will tell you, you cannot do that without significant changes in that ship. You will have to add cooling capacity, you will have to add electrical generating capacity, and this ship has already gained weight because it’s like  years into its service life. And ships are designed with a certain amount of weight-carrying capacity. Putting more radar will definitely add more weight, eat up more of its [design] margins, and – oh by the way, the ship prices I gave you [for the first ship of a restarted DDG 51 production line] of $2.1 billion and $2.7 billion are not ships with more cooling, more electrical generating capability and more radar. That will push the price up of that ship significantly close, if not beyond, 1000.
“All I’m trying to tell you is the [Navy] enterprise needs to sit down and have an analytical discussion about the warfighting capability, the production process and the likely cost of these ships and let the enterprise make those decisions.”
Young also discussed the new Future Surface Combatant, discussed at a recent meeting of the Defense Advisory Working Group (DAWG), a top Pentagon review panel.
“The DAWG decision agreed that there’s a possibility that we will have a future surface combatant in ’15. And that ship could be based on the DDG 51, could be based on the DDG 1000 hull. There is not enough analytical work done to make that decision right now. Too many decisions are being made on gut feel or what religious shipbuilding school you went to. And I think we need to go back and have that discussion. …
“The [Navy] department – and this was specifically discussed at the DAWG – has not decided the future hull for the future surface combatant. It could be 51s, could be 1000s. And so, if you possibly build additional 1000s but take the guns off and put missile cells on and make it a heavy destroyer or a light cruiser, those ships could make it nine hulls and be part of the 1000 program. And that would potentially not create the Nunn-McCurdy. This memo is solely me trying to be as honest as I possibly can inside my own family – it wasn’t intended for you all, it was something we could share with the Congress – and say we are not, at this time, going to take this program Nunn-McCurdy, until a decision can be made on which hull is this for the nation for our future surface combatant.
“If you prejudge that decision and assume there will only be three 1000 hulls, then you would need to go Nunn-McCurdy right now. …
“It will not go Nunn-McCurdy based on the average unit cost. But if you take all the development and divide it into a small number of units, this program is going to go Nunn-McCurdy.”
Young explained some of the figures in his leaked memo.
“You know what those numbers say? First, that’s build year 2005 numbers. I tried to be honest with you and inflate those to today dollars, which is more like $3.3 billion instead of $2.9 billion. That’s the lead ship, it has all the design cost. So it has about $800 million of production drawings and process and tooling to build the lead ship. So that cost in no way reflects the recurring cost to buy the next 1000 and the next 1000. … The second ship should cost $2.5 billion or less. …
“Right now, having visited the shipyard that’s going to build the lead ship, I have no reason to believe this ship will cost anything more than what’s budgeted. I have a signed contract to build the ship for $3.3 [billion]; if I back out the production costs, it’s two and a half.
“They’ve [General Dynamics Bath Iron Works] demonstrated to me they have the design, they have the tools, they are simulating the process, they’ve built some pilot modules. And I have every hope and reason to believe a yard that is actually doing a great job in finishing their DDG 51s has every possibility of building this ship to budget.”