1967, FY 1969, and FY 1971. The CVN-70 has been deferred by previous Congressional and DOD actions resulting in the earliest delivery now possible in late 1980. Unanticipated inflation of material costs and labor rates, and interrupted sequence of construction in conjunction with Nimitz and Eisenhower have all contributed to the increases in costs.

Admiral Zumwalt will describe in detail the need for CVN-70. I will only add that I support his views on the need for this carrier. The fact is that in the past 25 years we have relied repeatedly on our carriers to provide the means for executing our national policy. The growing capability of the Soviet Fleet is rapidly threatening our continued supremacy at sea. The U.S. carrier-based air power is the margin of difference between the two navies. At the same time, continued reduction in the number of our overseas bases indicates that the carrier's role in providing overseas tactical air power will be substantially increased. F-14. The F-14 program continues to be a subject of much controversy. The recent announcement by Grumman Aerospace Corporation that it couldn't accept future orders for F-14s at present ceiling prices will naturally have an impact on our planning for FY 73. Our present budget requests $570.1 million for procurement of 48 F-14A aircraft in FY 73. We are continuing to validate Grumman's claimed loss estimates.

Clouded by the shadow of increasing costs and often overlooked is the headway made in the development program. F-14A performance to date has been most gratifying with the aircraft meeting and often exceeding specifications. The first Navy Preliminary Evaluation (NPE) was completed in December 1971 and the initial reports indicate the F-14 is an excellent fighter. Nine aircraft are now in a flying status and full radar weapons system tests are scheduled during the next few months.

In summary, the Navy F-14A program is achieving the performance goals that were set forth four years ago. An advanced Soviet fighter, bomber, and missile threat was clearly emerging at that time. There is no other U.S. fighter aircraft in inventory or under development that can meet Navy's multi-mission requirements for sea control and force projection.

S-3A. This important anti-submarine aircraft program has successfully passed several milestones. On 18 January 1972, the integration of the S-3A electronics packages was demonstrated in the laboratory and on 21 January 1972, the aircraft completed its first flight.

While increasing costs require much scrutiny, I have every expectation that the S-3A will provide the best avilable carrierborne ASW weapon system to counter the Soviet nuclear submarine threat.

Improved CH-53 Helicopter.-The Improved CH-53 program is intended to provide the Navy and Marine Corps with a helicopter increasing lift capability from 8 to 16 tons. It will incorporate improved features of maintainability and reliability. Initial design and feasibility studies are complete and the propulsion system test bed is in full operation. The $10.0 million requested for FY 73 provides for continued development leading to future production of two prototype vehicles.

SSN-688.-Construction of the SSN-688 class submarine continues to be another of our highest priority procurement programs. The Navy has contracted for 12 of these modern, highly sophisticated submarines and has asked that six additional ships be approved as part of the 1973 budget at a cost of $1,050 million.

Patrol Frigate (PF).-We are asking $191.5M to build the lead ship of this new class of escorts, which will protect our vital wartime shipping and support forces, as well as conduct offensive ASW operations.

The PF will be almost unique among our shipping and support escorts in having the ability to shoot down, with a reduced form of our very successful Standard missile system, anti-ship missiles launched from Soviet submarines, aircraft, and surface ships. With a modern sonar and a facility for a helicopter, it will also have a good capability against the still numerous Soviet torpedo-firing submarines. Wrapped up in a tight package, with gas turbine propulsion, this makes a lot of capability for about $50-55 million per follow ship.

We believe that we will need to build at least 50 similar ships over a period of years to meet our minimum escort needs. As a result of our experiences in building other series-produced ships we are making a number of innovations. The $191.5M for the lead ship will include virtually all of the one-time costs necessary to prepare for series production. Present plans call for the follow ships to be built

in three shipyards, in blocks of manageable size, to preserve the economies of series production while giving us greater program flexibility, speedier delivery, and the advantages of competition. The present intention is not to request the follow ships until FY 75 so that the lead ship construction will be well along and follow ship risks will be minimized.

Undersea Long-Range Missile System (ULMS).—The Navy is requesting a total of $945.2 million in various accounts, to speed work towards this new strategic deterrent system. We had been holding back on ULMS development in hopes that progress toward strategic arms limitation would allow us to defer construction to the time when our Polaris and Poseidon subumarines come due for replacement. It appears, after a great deal of thought and study, that ULMS is the best way to maintain the sea-base portion of our nuclear deterrent forces. The system will consist of a new long-range, subsurface-launched ballistic missile and a new submarine to carry it. The long range of the missile will allow the submarines to operate close to our coasts and in regions where Soviet antisubmarine forces, even if vastly enlarged and improved, would have virtually no chance of finding and countering them. Ultimately, the new missile will have various features designed to make it very difficult for ABMs to shoot it down. And the new submarine will embody all improvements in submarine technology we have made since the last missile submarines were authorized nine years ago.

Status of Shipbuilding Cost Growth.-$155.7 million of the funds requested last year for shipbuilding cost growth and for completion of prior year shipbuilding programs were deleted because they would not be obligated during fiscal year 1972. In addition, we were directed to review unexpended balances in hopes of reducing the fiscal year 1973 request for cost growth. We have made such a review and are requesting $7.3 million less in fiscal year 1973 than was deleted in fiscal year 1972. The request of $148.4 million provides $110.9 million for cost growth and $37.5 million for completion of prior year programs.

Although no funds are being requested this year for new cost growth, there have been additional shipbuilder claims submitted in the past year. $55.4 million has been programmed for these claims thus far in fiscal year 1972 and additional funds may be required. Since several of the claims are still under review, an estimate of additional funds may not be available for as much as a year or more.

In summary, the Department of the Navy FY 73 budget is the largest we have requested although its real buying power is considerably less than that of the budgets of the Vietnam era in the late 1960s. There are several reasons for the increases in the FY 73 budget.

First, personnel costs are up. This is the result of the recent pay increases which were necessary in connection with our continued emphasis on recruitment and retention of highly qualified military personnel. Secretary Laird has recently stated that since 1964 military average basic pay rates have more than doubled (125% growth) and average civilian salaries have increased by 70%. This is reflected in an increase from 51% to 61% in the amount of the DOD budget alloted to military and civilian manpower. The percentage of the Navy Department budget alloted to manpower remains considerably beneath the DOD figures, having risen only 2% (42% to 44%) during the same period. Of additional interest, in terms of constant FY 73 dollars, the total Navy Department Budget has risen $3B while there has been no increase in the amount alloted to personnel. Clearly recognizing the greatly increased cost of manpower, we will continue to exercise all possible measures to minimize the percentage of our budget alloted for this purpose.

Second, our procurement budget continues at a high level, reflecting the urgent need to modernize our ships, aircraft, and weapons. It represents our response to the need for increased capability in the light of reduced force levels and the continuing improvements in Soviet naval power and influence.

Finally, our emphasis on RDT&E continues high, which relates to the pressing requirement for technological growth if we are to have reduced force levels. Our R&D effort is one of our most important investments at a time when U.S. forces are declining while Soviet capabilities are on the ascent. Only through an aggressive R&D effort will we be able to develop weapon systems which are more effective, yet require less people for operation and maintenance. V. Conclusion

As you can see, we have made progress toward our major objectives. Even so, the growing capability and increasing worldwide activity of Soviet seapower

tend to reduce our position relative to the Soviet Navy. The modern and expanding Soviet Navy is clearly exhibiting political clout and making an impact Its need to protect Soviet sea lines of communication is not a matter of vital national interest to the extent it is for the U.S. and allied navies to protect their sea lines of communication. The USSR has the advantage of designing its forces principally for the neutralization of U.S. Navy forces, whereas our Navy's primary objective is to assure the reinforcement and resupply of our forces abroad. We believe the USSR, by building up its naval and maritime strength seemingly beyond its needs, is making an obvious move in an effort to project its political power and to be predominant on the world's oceans.

The outward surge of the Soviet Navy is coinciding with pressures for a general worldwide pullback by the U.S. To allow this pullback from bases abroad to affect the maritime power equation on the seas would be a matter of grave consequences to us. Together with the navies of our allies, the U.S. Navy must be capable of maintaining the vital interests of the Free World. To do so, we must maintain a margin of supremacy at sea.

We thank you for your support in the past and ask for it again for our FY 73 programs which will be justified in much greater detail by the Navy and Marine Corps witnesses who follow me.

CONSTANT DOLLARS

The CHAIRMAN. Thank you. You certainly have had some good slides.

Your constant dollars, now, does that eliminate the war and inflation?

Secretary CHAFEE. Just take out the inflation.
The CHAIRMAN. Inflation?

Secretary CHAFEE. Yes, sir.

The CHAIRMAN. No reference to the war?

Secretary CHAFEE. No, sir. You can see it was higher during the

war.

The CHAIRMAN. All right. Do you have something further?

Secretary CHAFEE. No, sir; that completes it. I will be glad to answer any questions or wait until the others have made their statements.

The CHAIRMAN. All right; you will be with us and there will be chances to ask questions later.

Secretary CHAFEE. Yes, sir.

The CHAIRMAN. If it is agreeable to the committee, then, we will proceed with Admiral Zumwalt.

All right, Admiral, we will be glad to have you.

STATEMENT BY ADMIRAL ZUMWALT

Admiral ZUMWALT. Mr. Chairman, I welcome the opportunity to appear again before you in support of the Navy's authorization request for fiscal year 1973.

Again this year, Admiral Moorer has brilliantly summarized the strategic, deteriorating relationship between the United States and the Soviet forces. I can only add that the accelerated development of the Undersea Long-Range Missile System (ULMS) requested this year. is absolutely essential to assure a continuing, survivable, second-strike capability.

Our general purpose forces have become increasingly important with the advent of nuclear parity and its deterioration.

In particular, Navy and Marine forces represent the only forces that can be brought to bear in many likely contingencies. The 1970 Jordan crisis illustrates my point. [Deleted.] Naval power, including an amphibious force with embarked marines, was close at hand, available and capable of rapid reinforcement; and CINCEUR was spared a very difficult situation.

But a larger consideration is that the United States must be assured of use of the seas. If this island nation is to engage in commerce, deploy forces overseas or enter into credible mutual defense arrangements, it must have use of the seas. To illustrate: By 1985 it is predicted that we will have to import perhaps half the oil we need. We depend now upon imports of many strategic materials which are imported in whole or in part, with 15 of these, 80 percent or more, imported from overseas, and the future can only be estimated in terms of our dependence upon resources which can be pumped or mined from below the sea

bed.

The potential for coercion of the United States, with or without allies, inherent in this situation, is ominous when one considers the measures the Soviets are taking to improve their navy.

In this connection, I am delighted. Mr. Chairman, we are going to get a chance to present separately our case for the patrol frigates because these relatively inexpensive ships will make it possible to protect the oil and other vital imports against the Soviet submarine threat and developing Chinese threat.

The Soviet Navy has already developed a potential to challenge our use of the seas, as is indicated in the windows of this slide and the next slide. This shows you they have built-in terms of numbers of ships237 percent of our numbers in the last 5 years. They have increased in a 10-year period of time by fourfold the number of missile platforms they can bring to bear against us. They have overtaken us in numbers of merchant ships; they will overtake us shortly in deadweight tonnage. The final slide shows us most of our merchant ships are aging and obsolescing whereas most of theirs are under 10 years of age.

But the Soviet Navy has a basic weakness-a lack of seabased tactical air power. In this indispensable element, our carriers provide us a marked superiority in the broad ocean areas and give us an unmatched ability to project our power along the littorals. Maintenance of this edge is essential and is the reason why CVN-70 is the highest priority item in the general purpose forces of the budget. I might add, Mr. Chairman, that the continuation of our program to obtain the fourth nuclear carrier is one of the reasons why it has been possible to reduce the total number of carriers with a net savings in manpower. That is, we will reduce the overall numbers of men in the fleet as a result of getting this carrier and reduce larger numbers.

In the face of today's circumstances, we have had to make a series of hard choices in arriving at our final authorization and budget request. These included, for another year, trade-offs between the present and future and between large numbers of less costly, less capable units and smaller numbers of more capable, sophisticated units at much higher unit cost.