July 20, 2005

Analysts question cost of new US Navy destroyer

By Peter Kaplan

WASHINGTON (Reuters) - Budget analysts told U.S. lawmakers
on Wednesday the cost of building a new Navy warship could be
too high even by the standards of Pentagon officials.

Congressional Budget Office analyst, Michael Gilmore, told
members of the House Armed Services Projections Subcommittee
that the price of the first new DD(X) destroyer could be up to
$4.7 billion, above an upper limit supplied by military
officials to the panel on Tuesday.

At the request of subcommittee chairman Rep. Roscoe
Bartlett, a Maryland Republican, the Pentagon gave an upper
limit for an "affordable" first DD(X) of between $4 billion and
$4.5 billion.

"It seems to me we've got a dilemma. Who do we go to find
out what a fair estimate of the cost would be?" subcommittee
member Jim Marshall, a Democrat from Georgia, said in response
to the conflicting cost estimates.

The Defense Department's top weapons buyer, Kenneth Krieg,
told the subcommittee on Tuesday the DD(X) destroyer was needed
to deal with future military threats and would cost less to
operate in the long run than the older DDG destroyers.

Northrop Grumman Corp., with a shipyard in Pascagoula,
Mississippi, has had a leading design role in the DD(X)
program. Production is to be split with General Dynamics
Corp.'s shipyard in Bath, Maine.

The Navy wants to acquire 8 to 12 DD(X) ships but
escalating costs have become a major concern. The Navy projects
the first DD(X) will cost $3.3 billion, with an average cost of
$2.6 billion per copy once the rest are built.

In May, the full House Armed Services Committee proposed
capping at $1.7 billion the cost of the DD(X), roughly half of
the Navy's projection for the first ships.

Executives from Northrop, General Dynamics and other
defense contractors testified on Wednesday that the DD(X)
program was well-managed and all efforts were being taken to
cut costs.

However, military and financial analysts expressed doubts
about whether the increased firepower and stealth capability of
the DD(X) were really necessary and said the military should
investigate building a scaled-down version of the new warship.

Gilmore, of the Congressional Budget Office, disputed
Pentagon assertions that the DD(X) destroyer would be cheaper
to operate over the long term.

Robert Work, a senior analyst at the Center for Strategic
and Budgetary Assessments, said the Navy already had
overwhelming firepower to launch ship-based missile attacks.

"The DD(X) from our perspective is not the right ship at
this time," Work said.

Work said the military could integrate many of the new
capabilities of the DD(X) into a smaller ship and build them at
both the Mississippi and Maine shipyards.

It would be a "prudent strategy" to keep both Naval
shipyards in operation, Work said, because China, a potential
U.S. rival in the future, was ramping up its shipbuilding.

"Would we need a second shipyard today? Probably not," said
Work. "Would we need a second shipyard 10 years from now?
Possibly yes."