First, the 30-year plan is not constructed with a view toward shipbuilding efficiency. Advice from industry was not sought in constructing the plan. The significant advantages of batch procurement (buying several ships in the same budget year rather than spreading them out over several years, a lesson from the 1980s) have not been incorporated. The Department of the Navy could get more ships for less money.

Second, even with a redesigned plan, there are funding shortfalls if the goal of 313 ships is to be achieved. For example, we believe that costs for the littoral combat ship are understated and we note that real warships are few and far between. The top-line SCN budget based on 2006-2007 dollars must be increased significantly, and that will require recognition that naval forces will remain a critical element of national security.

Next, the size of the operating Fleet has fallen below a prudent level and is falling further. We strongly support retaining rather than decommissioning certain surface combatants and drawing on the industrial base to conduct a service life extension program on these ships. We endorse the ideas along these lines advanced by Admirals Pilling and Natter in their October 2006 Proceedings article.

Further, the move toward over-reliance on contracting on a “cost plus” basis is fraught with peril. For the Navy customer, it seriously reduces internal discipline in introducing new requirements, confounds accurate budget planning, and circumvents the necessity of careful packaging of preplanned improvements in the construction process. It also encourages laxity on the part of contractors in properly managing costs. These are more lessons from the DDG, CVN, LHD, and SSN programs of the 1980s. Cost-plus contracting might be appropriate for new combat systems, but ships are multi-year construction projects that are not amenable to the use of this contracting method in other than “medium- to high-risk” endeavors such as the lead ship of a multi-year program.

Finally, retaining the Marine Corps’ forcible entry capability is an important goal, but we think it is doubtful that black hulls (naval ships built to commercial rather than military standards) will provide the required flexibility and combat power. Saving Sailor billets by going to new design (and unfunded) black hulls will be more costly in the long run. A black-hull approach can work for traditional logistical support missions, but is simply not appropriate for forcible entry.
Here are our recommendations:

• Form an industrial advisory team and rework the 30-year shipbuilding plan.
• Re-examine actual funding requirements and campaign for SCN funds to meet those requirements. Lobby for a realistic funding profile significantly greater than current projections. This will require building consensus that naval forces will play a major role in future overseas presence and crisis control.
• Begin, and then maintain, a modernization and service life extension program for select surface combatants.
• While improvements to current contracting policies might be appropriate, review the painful lessons of the past before committing to over-reliance on “cost-plus” contracting for ship construction. At the same time, resist any congressional pressure for reverting to “fixed-price development”—again lessons learned from prior unsuccessful experiences such as the A-12 program.
• Draw on the lessons from the 1980s in contracting for multi-year ship production and instilling discipline as new requirements and improvements are added.
• Take a hard look at actual Marine Corps forcible-entry requirements and develop a practical mix of black and grey hulls.

In summary, building the naval forces for the complex, multi-ocean and multi-mission threats and contingencies of the future must begin as soon as possible. This will require fixes to the shipbuilding program be made as outlined above—not an all-inclusive list but, in our view, the most urgent.

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Admiral Mauz, a career surface warfare officer, retired from the Navy in 1994. His last assignment was Commander-in-Chief, U.S. Atlantic Fleet. He now serves on several corporate boards and works with the Naval Postgraduate School.

Mr. Sawyer was the Assistant Secretary of the Navy for Shipbuilding and Logistics in the first Reagan administration and is now Managing Partner, Sawyer-Weems, LLC.