U.S. Navy Budget Plan: Major Questions Abound

WASHINGTON – The carrier is out. The carrier is in. The carrier is in, but only if money goes up.

More planes are back in – well, sort of, but we’ll have to see. The new buying plan for littoral combat ships is – not yet decided on. The plan for laying up and modernizing half the fleet’s cruisers is almost ready but – not quite yet. New rules for counting the battle force are – not quite there, either.

The once-orderly, sequential process of formulating each year’s Pentagon budget request is a thing of the past, shot to pieces by congressional budget chaos, White House indecision and leadership issues within the Pentagon. The U.S. Navy – along with the Air Force and Army – while not bereft of blame, is often left to ponder the intent of the directions it receives from on high.

As a result, while the budget submitted to Congress on March 4 contains thousands of incredibly detailed line items, some of the biggest issues remain to be decided, even as the service’s leadership prepares to head to Capitol Hill to face questions from lawmakers, many shaking their heads at the last-minute nature of many key decisions.

At the top of the questions facing the Navy is the future of the aircraft carrier George Washington. The budget request eliminated funds for a scheduled $3.5 billion, three-and-a-half-year refueling overhaul that would start in 2016. This would mean permanently decommissioning the ship, part of a plan to reduce the 11-carrier fleet by one and cut one of 10 carrier air wings.

The carrier is a centerpiece of a wider fight between the White House and Congress over the future of mandated budget reductions – an issue known as the sequester.

Should there be no changes in the sequester rules, the Navy has told Congress, the ship and its wing will go. If lawmakers agree to lift budget caps starting in 2016, the ship can stay.

Should funding be restored, a slight delay in the overhaul is likely, possibly pushing the work into 2017.

The situation was further clouded March 5 by an internal Pentagon memo to the service chiefs from Acting Deputy Defense Secretary Christine Fox. It directed the Navy to “program for 11 carrier strike groups and the appropriate number of associated air wings, including the refueling and overhaul” of the George Washington.

That contradicted testimony that same day by Defense Secretary Chuck Hagel, when he told Congress the inactivation was going ahead unless budget caps were lifted.

The Fox memo confused Navy officials and Hill people alike.

Fox’s memo was “not very helpful,” one congressional staffer said. “It added to the confusion rather than clarifying the situation.”

Other key budget-related questions are abundant with the Navy’s 2015 submission.

Littoral Combat Ship

The Navy restructured the LCS procurement plan from four ships each in 2015 and 2016, and two thereafter, to three per year starting in 2015 – part of a newly directed scheme to examine LCS alternatives after 32 ships. The three-per-year laydown, however, breaks the last ship of 10-ship block buys awarded to each of the two building teams, meaning that one ship will need some sort of contract modification.

It also is not yet clear how the Navy wants to parse out three ships per year between the teams, led by Lockheed Martin and Austal USA, or whether the dual-design purchase plan will go forward.

Congress already is frustrated at the lack of answers to these questions, even though the new scheme was only agreed upon weeks ago.

“The Navy is in the process of reviewing a range of potential options for the FY 2016 ship procurement,” Lt. Caroline Hutcheson, a Navy spokeswoman, said March 7. “A number of reviews within Navy and [Office of the Secretary of Defense] are planned over the next year to determine the acquisition strategy prior to release of a request for proposal and subsequent award.”

MH-60R Helicopters

An even larger contracting problem could affect the service’s decision to zero out plans to buy 29 Sikorsky MH-60R helicopters in 2016 – the last year of a multiyear procurement (MYP) contract.

The surprise reduction is being tied by the service to cuts in the LCS buys and the air wing cut. But the numbers don’t really add up – four aircraft normally are assigned to a deployed air wing, while it might be presumed that the small surface combatant that follows LCS would also use the helo.

“The MYP cancellation is not official,” a Navy official said. “Any decision to cancel the MYP for MH-60R will be done during the FY16 budget cycle. [The 2015 budget] does not cancel the MYP, and includes the necessary advanced procurement for FY16 necessary to maintain the MYP contract.”

Should the helicopter not be ordered, an industry source said, considerable penalties would be paid to Sikorsky and systems integrator Lockheed Martin – possibly nearly equaling the $41 million cost of a delivered aircraft.

Battle Force And Cruisers

New rules about which ships qualify to be counted as fleet battle forces assets also were expected to have been issued by the time of the budget submission.

The rules will count deployable ships, including vessels such as forward-deployed patrol craft and minesweepers, but not units of those types that do not regularly deploy beyond U.S. waters.

The Navy’s two hospital ships also will be counted, as they support “soft” missions. Overall, the new rules would change the current 283-ship fleet to 291 ships.

As of March 7, the new rules had not been signed out by Navy Secretary Ray Mabus. Planners had expected they would count, however, and budget briefing documents on March 4 referred to a 291-ship fleet.

Also still to be finalized is the fleet’s plan to “lay up” and modernize 11 Ticonderoga-class cruisers – a touchy issue on Capitol Hill, where lawmakers flatly rejected an earlier Navy request to decommission seven ships. Congress is eager to hear the plan, including a timeline for inactivating and overhauling 11 ships, how their crews would be assigned, and how much money the project will cost.

Navy officials had expected to finalize the scheme in advance of the budget submission, but it remains a work in progress, guided by Fleet Forces Command.

The service is assuring the Hill, however, that it has every intention to keep the cruisers going.

“The Navy has no intent to decommission these ships, and we continue to work our phased modernization plan,” the Navy official said.

Funding Options

Further clouding the budget picture is the pending release of the White House’s Opportunity, Growth and Security Initiative (OGSI), a $26 billion additional funding request expected to be sent to Congress in the near future. The OGSI will seek to restore a number of budget-reduction cuts made in the Pentagon’s base budget request.

More Navy aircraft are likely to be included in the OGSI request, including P-8A Poseidons, E-2D Advanced Hawkeyes, C-40 Clippers and RQ-21A Blackjack unmanned air systems. The request is not expected to restore the MH-60R helicopter cuts.

Discussions about what would go into the OGSI continued March 7.

Other options to restore some of the budget cuts include listing programs on an unfunded requirements list requested by Rep. Buck McKeon, R-Calif., chairman of the House Armed Services Committee. Reviving a practice that ended in 2012, each of the services is expected to compile such a list.

As with the OSGI, discussions continued March 7 about what items would be included on the Navy’s unfunded list. The list is expected to include readiness and maintenance funding and restoration of the George Washington’s refueling overhaul.

According to a knowledgeable Pentagon source, the list could also include EA-18G Growler electronic attack aircraft. The Navy concluded its Growler buys in 2014, along with all other variants of the F/A-18 Super Hornet, but Congress added $75 million in the ’14 bill to support advanced procurement for 22 aircraft.

While there is not an existing requirement for more aircraft, additional Growler buys would allow five-plane squadrons to grow to seven each, giving improved electronic attack capabilities in an anti-access/area-denial combat environment.

The move would also allow Boeing and Northrop Grumman to keep open Growler production lines at least another year, giving the firms more of a chance to seal a foreign military sales deal.