STRENGTH OF U.S. NAVY

Mr. MAHON. Mr. Secretary and Admiral Zumwalt, the Navy budget is rising annually. Of course, witnesses always respond, "Yes, but we have inflation, so in constant dollars we are going downhill pretty

fast."

My question is: Are we obtaining a stronger and more capable Navy for these additional amounts, or is it costing us more to maintain roughly the same strength? Is the U.S. Navy stronger today than it was when you appeared before us last year, Mr. Secretary?

Secretary WARNER. This year we are requesting $28.985 billion, the difference between that and the submission in 1974 being $1.438 billion. There are two significant increases this year. The first is an increase of $655 million in O. & M.N. funds, and the second, $518 million in B. & D. funds.

As we can show you clearly, sir, those increases are offset by decreases in other accounts. Consequently, it is my judgment that the 1974 and 1975 budgets in constant dollars are about equal.

You asked whether the Navy today is stronger than it was a year ago when we were before you. In April of 1973, our Navy was just emerging from the conflict in South Vietnam. I am sure the chairman and the members of the committee and the staff will recall that in the latter stages of that conflict the U.S. Navy played a very major role. At Christmas of 1972, we had the largest number of ships that we had ever had committed off the shores of South Vietnam. When we were before you last year our somewhat battle weary, battle strained ships and crews were just beginning to return to the United States. With the resources we had, we were rebuilding the readiness of our fleet as rapidly as we could. We were making progress until such time as the Middle East conflict set in, in October, of 1973.

Unquestionably, the responsibilities and the commitments of the U.S. Navy in that new conflict set back the progress, the momentum, that we were slowly gaining as we emerged from Southeast Asia.

So, on net balance, Mr. Chairman, it would be my judgment that the strength, which we basically measure in terms of readiness and fleet units, of the Navy today as opposed to a year ago is about the same, plus one or two degrees stronger. That is my personal conviction.

Mr. MAHON. You say basically in military strength we are a bit stronger than we were a year ago?

Secretary WARNER. Just a fraction.

Mr. MAHON. Would you say we are a bit stronger vis-a-vis the Soviet Union, or a bit stronger-period?

Secretary WARNER. A bit stronger vis-a-vis our readiness level a year ago. When I say stronger. I mean, in my judgment, the curve is just bottoming out and beginning to come back. It is hardly perceptible.

Mr. MAHON. Admiral Zumwalt?

Admiral ZUMWALT. My judgment, sir, is that we are less capable this year than we were a year ago.

Mr. MAHON. Are you saying vis-a-vis the Soviet Union, or just from the standpoint of improvement in our strength?

Admiral ZUMWALT. Both, sir. We are less good than we were a year ago, and we are less good in comparison to the Soviet Navy by an even greater margin than we were a year ago.

We have a smaller number of ships than we had a year ago, a smaller number of aircraft than we had a year ago, a smaller number of people than we had a year ago.

The investments that we made based on last year's budget will not become available to add to the strength of this Navy for a number of years. We have been decreasing our current capability every year for 5 years. The investments that we have been making with the money that has been freed up will not begin to come to bear for another few years.

Therefore, in the net, we are down.

Secretary WARNER. Mr. Chairman, relative to the U.S. Navy 197374, I said perhaps a degree stronger. I stand on that. Relative to the Soviet Navy, I generally concur in the admiral's observation that we have fallen behind..

Mr. MAHON. It seems every year we poor mouth the Navy when we have these hearings. I myself think we have a rather good Navy, and that it can hold its own in the atmsophere of the world. I do not know that anything could survive a nuclear war. Of course, we do not expect one because it might mean the end of civilization as we know it.

NEW SHIPS ADDED TO FLEET

What new ships have been added during this period?

Secretary WARNER. I would like to answer that question in two ways. First, it takes around 5 to 7 years to bring into being new ships in the Navy. I would like to go back and trace for you the SCN funding 5 to 7 years ago. For example, in 1968 we had 1.15

Mr. MAHON. Why don't you supply that for the record, and tell us what new ships have been added to the Navy since we met last year. Secretary WARNER. If you will let me enter in the record, we had a little over a billion dollars in 1968-69 funding. Those investment dollars produced 26 new ships and 6 conversions during the past calendar year. But you must break that down to see that there were only 2 new attack submarines and 5 destroyer escorts within that 26 figure. Also included in that figure were 16 yard and service craft which are basically small and not combatant ships.

In essence, sir, we only added seven major combatant ships to the fleet in the last calendar year.

Mr. MAHON. In the last calendar year we added seven new combatant ships to the Navy?

Secretary WARNER. That is correct.

Mr. MAHON. Will you list those?

Secretary,WARNER. Yes.

There were two SSN's: 684 and 680.

Then the DE's were DE 1090, 1091, 1092, 1093, and 1094.

Mr. MAHON. That is a list of the seven?

Secretary WARNER. That is a list of the seven.

SHIPS RETIRED FROM ACTIVE FLEET

Mr. MAHON. What old ships have been retired during this past year from the active fleet?

Secretary WARNER. One hundred ships were dropped from the fleet during calendar year 1973. Forty-seven of them will be stricken from the Naval Register, 7 transferred to the Military Sealift Command, 5 to be placed in inactive status in Navy custody, 33 transferred to Reserve forces, and 8 will be placed on loan to foreign governments. Additionally, two ships are undergoing conversion, and they are stricken temporarily.

Mr. MAHON. How many of those ships were combatant ships? Secretary WARNER. Mr. Chairman, I would like to provide for the record the answer to that question.

AIRCRAFT ADDED TO ACTIVE INVENTORY

Mr. MAHON. How many new aircraft were added to the active inventory of the Navy and Marine Corps in the past year?

Secretary WARNER. There were 271 aircraft added to the inventory during calendar year 1973, of which 189 were combat, 11 airlift, and 71 trainer. I am prepared now to give you the detailed breakdown. Mr. MAHON. You do not need to do that. Just put it in the record. [The information follows:]

The Navy and Marine Corps added the following new aircraft to the active inventory during calendar year 1973:

Mr. MAHON. That number of craft in an all-out war would not last too long.

Secretary WARNER. No, sir. In my judgment, we are behind in replacing aircraft in both the Navy and Marine Corps.

Admiral ZUMWALT. We took a reduction in aircraft, and the average age increased.

Mr. MAHON. What is the average age, do you know?
Admiral ZUMWALT. I will provide it for the record, sir.

[The information follows:]

The average age of the Navy/Marine active aircraft inventory in 1974 is 8.9

years.

Mr. MAHON. The Navy has been getting really the major part of the Defense budget for several years. Yet in the net assessment of United States and Soviet naval forces, you report to us today serious deficiencies.

With these vast sums of money, why have we not been able to make greater improvements?

Admiral ZUMWALT. We have been building a new house which is not completed, and have torn down most of the old house in which we are living, sir. Forty-seven percent of the ships of the Navy have been disposed of. We have had a net reduction of 47 percent in the number of ships in the Navy in the last 6 years, a 24 percent reduction in the number of aircraft in the last 5 years.

MANAGEMENT OF SHIPBUILDING PROGRAM

Mr. MAHON. Too many Navy procurement and development programs have incurred serious cost increases. This kind of development is not confined, I agree, to the Navy. The shipbuilding program especially has been beset by problems and cost overruns.

Can you report any evidence of progress in the management of the shipbuilding program? It apparently has been pretty horrible.

Secretary WARNER. Mr. Chairman, we continue to strive to improve in this area. We recognize the deficiencies. We also recognize the management difficulties inherent in the control of such a program.

If I may digress for a minute, both fortune and misfortune have visited the shipbuilding industry in the past year. For many years the United States Navy had considerable leverage in bargaining with shipyards for their contracts. This is because our domestic shipbuilding program has been deficient.

The domestic deficiency, I am pleased to report on behalf of the United States, has been largely remedied. Consequently, there are large numbers of ships destined for domestic purposes now under construction in our yards. But this means that the Navy no longer has such a strong bargaining position with those same yards performing both domestic and military construction work.

With respect to management of our building programs, I can point, for example, to efforts to control ship characteristics. I think Admiral Zumwalt has shown more leadership in that area than any of his immediate predecessors.

Further, we have instituted methods to resist marginally beneficial changes, requiring strict change order review within the Navy.

Further, to limit change order liability by insisting on a maximum of Government liability for change orders, and to insist on adequate test and evaluation.

We are also emphasizing design-to-cost goals in the design and procurement of our new ships.

Mr. MAHON. Do you want to comment on that?

Admiral ZUMWALT. No, sir. I think that is a good answer. I will stand on it.

Mr. MAHON. Some of the ships are being built down on the gulf coast. What is the situation there?

Secretary WARNER. I think you are probably referring to Ingalls Division of Litton Industries in Pascagoula. That yard is presently constructing the LHA and the DD-963, the LHA being the amphibious assault ship, the DD-963 being the Navy's new all-purpose destroyer.

The LHA, of course, has been the subject of considerable controversy between the Department of the Navy and the parent company, Litton Industries. That negotiation is continuing.

I can report to you that I met with the Deputy Secretary of Defense together with the Chief of Naval Operations Monday of this week for an extensive period of time. The Deputy Secretary of Defense is personally assisting the Department of the Navy in resolving that dispute.

If I were to comment on the details, it could be prejudicial to what I hope for as a resolution of that problem on the LHA in the very near future.