Budget Delay Hurts USN Shipbuilding, Maintenance

Life under a continuing resolution (CR) already is causing problems inside the U.S. Department of the Navy, and the prospect of operating for an entire year under a CR is sending chills throughout the service.

"That we're still operating under a continuing resolution is a nightmare" that affects every appropriations category, one senior Navy official said. "We've operated under a CR before, but never for this long, and certainly not by the time we're submitting the next year's budget."

A full year of a CR would cause "a severe funding shortfall," said a Navy source.
Among the worst effects is the disruption and uncertainty, one former Navy official said.
"With all that uncertainty, they have to make cuts, and they need to start making them now," the former Navy official said. "They can't plan on getting money. They have to start actions now."
Navy budget director Rear Adm. Joe Mulloy is charged with keeping calm amid the budget storm. Dealing with a few months of the CR can be managed, but problems grow as the second quarter of the fiscal year begins in January.
"We can hold our breath," Mulloy said Feb. 3. "Typically, a lot of contracts are not designed to be let in the first quarter of the fiscal year. But when we go into the second quarter and there's still the potential of a yearlong CR - which has never happened to the entire Department of Defense - you reach a point where you're limited by dollars and by quantity.
"And the dollars become extremely difficult in the operations and maintenance world, and in the manpower costs," Mulloy said. "You have inflation, pay raises, the cost of doing business, along with some programmatic growth - more maintenance, more operations, more whatever. So you end up rolling over, in the Navy's circumstance, $4.6 billion between '10 and '11, the delta [difference] of what I'm short. About $1.5 billion of that is price growth - just the cost of buying fuel, buying things - and the rest of it is all parts of programmatic growth. More ships in maintenance, a full year of more ships being deployed, and aircraft maintenance and all that."
The cash crunch will hit several accounts especially hard, said the senior Navy official: personnel, shipbuilding and other procurement. Among the effects, he said, are:
■ Yearlong support and maintenance contracts for base operations can't be signed. "Hundreds of contracts have been broken into short installments."
■ Personnel travel has been cut by 25 percent.
■ Hiring freezes have been put in place in the Marine Corps and Navy.
■ Security clearance investigations have been curtailed.
■ Permanent-change-of-station orders are being slowed.
Other effects of prolonging the CR, the Navy source said, would be:
■ Cancellation of 29 surface ship overhauls.
■ Deferred maintenance on aircraft, aircraft engines and equipment.
■ Deferred certification of weapons.
■ Cuts in training and exercises, ship and aircraft operations, and combat support and combat service support.
Navy aviation accounts aren't severely affected by the spending limitations, as the service asked for about $1 billion less for aircraft in 2011 than in 2010. The only problem area might be the purchase of E-2D Advanced Hawkeye airborne control aircraft, but that isn't scheduled to happen until the summer.
The shipbuilding accounts, however, could take a hard hit.
One of the chief problems with managing shortfalls in the shipbuilding accounts, Mulloy said, is that Congress appropriates monies for specific ship programs rather than for shipbuilding as a whole. That prevents the service from shifting money between shipbuilding programs. "I'm about $6 billion out of whack in ship construction," Mulloy said.
For 2011, the service wants to spend money on a new aircraft carrier, a second Virginia-class submarine, a new destroyer and the upcoming refueling overhaul of the aircraft carrier Abraham Lincoln.
About $1.7 billion is available for a new amphibious ship - the Navy received that much for a 2010 ship - but the service doesn't need one in 2011. But without the specific authority to move money between ship accounts, the Navy's hands are tied.
"I have dollars in the wrong place," Mulloy said.
This was to have been the first year since 1989 that the Navy hoped to order two submarines. A contract to start work on one was awarded in January to General Dynamics, but no money is available for the second sub. GD agreed, however, to hold the price for the second ship until March 21, so if the money comes by then, the Navy can still take advantage of the price benefits of ordering two at a time.
But the impacts on ship maintenance won't be cured that fast if the CR continues, as the fleet looks for overhauls that can be put off. None have been canceled so far.
But if enough shipyards don't get that maintenance work and similar work on 70 aircraft and 290 aircraft engines is deferred, up to 1,300 private sector jobs might be lost, the Navy source said.
"This is a nightmare," said the senior Navy official. "It has to be fixed."

South Korea To Deploy Guided Imaging Rockets On Border Islands

SEOUL - South Korea plans to eventually deploy precision-guided rockets jointly developed with the United States on islands near the disputed western sea border with North Korea, the Joint Chiefs of Staff (JCS) said Feb. 4.

A U.S. Navy AH-1W attack helicopter launches a Low-Cost Guided Imaging Rocket during a May 2010 test at the Point Mugu sea range. An official said Feb, 4 that South Korea will soon deploy the rockets near its disputed sea border with North Korea. (U.S. Navy)

The deployment of the Low-Cost Guided Imaging Rocket (LOGIR) is aimed at thwarting a possible infiltration by North Korean combat hovercraft in the western waters of the Korean Peninsula, a JCS spokesman said.

"Recent intelligence indicates that North Korea has forward-deployed its high-speed hovercraft to a naval base near the Northern Limit Line (NLL)," the spokesman said. "If that's true, there is a limit for us to responding to it only with coastal artillery guns. So we're considering the deployment of the 70mm guided rocket to the border islands."
Previously, the local Chosun Ilbo newspaper reported that South Korean and U.S. intelligence authorities have detected construction work being done for a base in the Koampo area in Hwanghae province, just 50 to 60 kilometers from South Korea's Baengnyeong Island, one of the five islands near the NLL. The base is presumed to be able to accommodate up to 70 hovercraft, and each of the air-cushion vehicles can carry a platoon and travel up to 90 kilometers per hour across water and mud flats, according to the report.
North Korea has rejected recognizing the NLL, drawn up by the U.S.-led United Nations Command at the end of the 1950-53 Korean War, making occasional provocations near the border.
In March 2010, South Korea said its patrol ship Cheonan was torpedoed by a North Korean submarine near the border. Forty-six sailors were killed. The North also fired about 170 shells from its coastal artillery pieces and multiple rocket launchers in November onto Yeonpyeong Island, killing four people, including two South Korean Marines.
Since then, South Korea has vowed to fortify the islands by deploying more troops and high-tech weapons, such as the Israeli GPS-guided Spike missile and the Swedish ARTHUR artillery-finding radar.
The 60-billion-won LOGIR project was signed by the U.S. Naval Air Warfare Center and South Korea's Agency for Defense Development (ADD) in 2007.
The joint project aims to equip the 2.75 inch (70mm) unguided air-to-air or air-to-ground rocket, or Hydra 70, with a precision-guidance system, an infrared-ray-image sensor with a rocket motor and wings.
The first test-launch of the rocket system was successfully made in June.
The weapon is schedule to begin service by 2014, and the U.S. Navy is expected to buy about 30,000 LOGIRs, according to the ADD.
Meanwhile, as part of efforts to boost its defenses against North Korea's possible artillery attacks on the border islands, the South Korean military has ordered more ARTHUR weapons locating systems from Swedish defense group Saab under a contract worth nearly $69 million, according to Seoul's Defense Acquisition Program Administration and the supplier.
The new batch of ARTHURs will be manufactured by LIG Nex1, an electronic weapons maker in South Korea, with technical assistance from Saab.
The South Korean Army first ordered six ARTHURs in 2007.
"We are delighted to have received this important additional order from South Korea that further proves our customer's confidence in the capabilities of our weapon locating system, Arthur," said Micael Johansson, senior vice president and head of Saab's Electronic Defense Systems business.
The ARTHUR is a stand-alone, C-band, medium-range weapon-locating system that detects and locates enemy fire using a passive phased-array antenna technology for optimized battlefield performance.