U.S. Department of Defense Office of the Assistant Secretary of Defense (Public Affairs) News Transcript

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Presenter: Deputy Assistant Secretary of the Navy for Budget Rear Adm. Joe Mulloy

February 01, 2010

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LT. FERRARI: Good afternoon. I'm Lieutenant Callie Ferrari, Public Affairs Officer to Rear Admiral Joe Mulloy, Deputy Assistant Secretary of the Navy for budget. This afternoon Admiral Mulloy will be briefing the Department of the Navy's fiscal year 2011 budget submission. After that we'll open up to questions. If you need any additional information after this brief, please let me know.

With that, Admiral ….

ADM. MULLOY: Thank you, Callie. Good afternoon, everyone. I am Rear Admiral Joe Mulloy, and I have about 17 slides to lay out for you on the Department of the Navy budget This is my first time doing this, so as we get to the question section, unlike your other previous briefers who had a lot more experience and know who you all are, please let me you're your name and news organization. I look forward to working with you this year and over the next couple years in this job. Next slide.

You've already heard a lot about the QDR. I would say as our Navy budget supports the four Ps of the QDR, but the three words that come to mind for us are continuity, it's continuity from the April '09 budget with direction on ships and taking into account regular warfare. It also is compliance with the QDR in actual defense strategy. In a lot of cases we've reorganized our forces and made substantial changes such as the shipbuilding plan, and imagination with how can we use the forces we have and bring to bear reserve active integration in some areas, as well as the wide variety of missions and platforms we have to support the four Ps.

As you know, our joint force depends upon the Navy and Marine Corps team to prevail. We constantly prepare around the world; we're a significant part of the prevention and deterrents, whether it's the high end of our nuclear weapons or the low end of our day-in-day out planning and operations such as Africa Partnership Station, you know, the Mercy missions comfort last, so it's comfort right now, and preserving our forces and the world around us. Next slide.

Our Navy and Marine Corps remain globally engaged on a daily basis. The numbers as laid out here for the Navy and Marine Corps team -- you see the various numbers of sailors or ships. One thing to highlight is remain at the same levels of deployment and operability that we've had since post-9/11, and 50 percent of all of our ships are underway and an average of about 40 percent are forward deployed. So it's a significant effort to get all these ships ready, maintain them on deployment, bring them back, and those that carry the Marines the same path.

A couple things that will be different. You'll see as we do have five aircraft carriers, five large-decked ships. And I'll draw your attention to the ship -- the picture on the bottom left kind of highlights that Navy-Marine Corps team. This is over the beach about two days after -- or within about a day, of actually the first amphibious ship Bataan arriving in Haiti.

As you remember, most of the piers are broken down; having to figure out could they support structure or not. That did not stop the Navy or Marine Corps group. Over the beach they started delivering supplies, and the Marines were out in the southern claw in the most devastated area promptly by using the equipment and training that we have day in-day out is deployed forward.

The Marine Corps -- on the right you'll see a draw-down in Iraq. That number last May was 14,000 Marines. By early next week we expect that to be down to 1,300, and the balanced off is the number in Afghanistan are going up. Next slide.

Okay, here's our standpipe chart similar to the ones you saw for Mr. Hale and for the Army. I'll bring your attention right to the middle, FY '11. The Navy budget baseline is $160.6 billion (dollars), and with our overseas contingency counts of $179.1 (billion dollars).

This is a 3 percent growth over '11, with a 1.5 percent real growth, so similar too but a little less than OSD, and across the FYDP this works out to 0.6 percent real growth for the Department of the Navy. A couple of points to make here. You see the $3.8 billion (dollars) -- I'll talk about it a little more later on. That's our supplemental for Afghanistan operations; it includes fuel and supports some old Navy operations, and then that moves up to $18.5 (billion dollars) in this budget as attached to the base budget. Next slide.

Breakdown of the budget. In the center you can see the $160.6 billion (dollars) again; that's up from $156 billion (dollars) as enacted for last year. And then going around, I'll start in the upper left and I'll have a slide for each one of these develops. MILPERS is $45.1 billion (dollars). That supports our Navy strength, the base strength of 324,300, and the Marine Corps of 202,100. It includes base pay, housing allowance, medical or health accruals, retired accruals and the various pays and allowances.

Procurement upper right we view as another success for the second year in a row; that is our largest part of our budget at $46.6 billion (dollars). We consider it a balanced investment of aircraft of a wide variety of types. A shipbuilding account I'll get to is 50 ships over the FYDP, and a series of other, smaller procurement accounts. R&D in the bottom right is actually going down, but we really view that as a transition. I talked about continuity; this is many items that are proceeding into procurement accounts and out of R&D.

Just a couple of changes were in terms of some of the aircraft plans moving on and also just one large item was $700 million in congressional plus-ups in R&D last year that reflect this large drop. Infrastructure is stable at $5 billion, and I'll have more that with a couple of slides. The biggest chunk of that is Marine Corps around the country for grow the force and some in Guam. And then lastly O&M, $46.2 (billion dollars). That's allowing us to prevail in our current conflicts that supports all of the baseline, the big five, or the big accounts of ship maintenance, air maintenance, air ops and ship ops, as well as Marine Corps ground ops and a wide variety of other accounts.

Next slide, military personnel. You can see the Army and Navy -- over these last couple of years we're on two different paths but we've both kind of stabilized. The Navy was downsizing as we looked at the mix of people at sea and ashore. We also looked at the mix of ships we have. We're stabilizing out at approximately 324 (thousand) to 328,000 personnel with a small support nook of 4,400 again, because of the large number of Navy IAs on an individual bases supplying personnel to what we call -- what I would call an outer rate.

They are assisting the Army and Marine Corps on ground in Iraq and Afghanistan in areas such as the provincial reconstruction teams, where you have submarine chiefs and submarine officers actually running reconstruction teams. Clearly not an in-rate experience for them; some of those people, those chiefs, those petty officers, junior officers are supported in the IA account to allow us to have the force of people to man those billets. The Marine Corps, on the counterpoint, was growing and they have suddenly overshot in stabilizing in, and they'll be at their 202,100 and that's all funded in the base force. Next slide.

Civilian personnel. There is a growth of 6,700 personnel. This reflects insourcing, moving contractor billets into civilian personnel, part of which is acquisition workforce, as well as some other government expertise for acquisition. Defense health and medical increases, the Marine Corps has a substantial increase of 2,900 for base operations and security as they move their security force back into inherently government as well as base support for the large amount of grow the force MILCON you'll see later, and then a series of smaller changes for 940 personnel. This completes our leg of the reserve and active and our civilian personnel, the triad of maintaining our personnel. Next slide.

Readiness accounts, broken into the six major areas here. Upper left is the ship operations. Once again with OCO was funded for 58 days deployed, 24 non-deployed. Flying hour maintains the Navy at T2.5 readiness and the Marine Corps at 2.0. Marine Corps operations maintains the three active Marine expeditionary forces, consists of -- there are 27 active battalions at their deployable date goal of 88 percent, but the reduction you see there is the larger number of Marines coming out is more than what's going to Afghanistan, even though Afghanistan costs slightly more. The actual mix of Marine Corps operations is going down.

Ship depot maintenance between OCO and base is funded for 99 percent. Our ship maintenance is funded, aircraft depot maintenance, 100 percent of our deployed squadrons, engines and engines and airframes. And then base support is up at 92 percent of our sustainment model and the base support is at the designated capability levels as required for the individual sections of it. Next slide.

Shipbuilding, it lays our plan as modified is 50 ships. I'll draw your attention to a couple items. First is the carriers on five- year centers is Secretary of Defense directed. Once again a compliance issue, FY '13. Virginia class has two per year across the FYDP. Our DDG 1000 continued to remain; is now in production of the three hulls. And they'll be completely rebuilt but that completes that class.

The DDG 51 class, we have continued in the restart plan that started in 2010 with a profile of 12 -- or 212121 across the FYDP. We'll continue to build these ships for the wide variety of missions they bring, but primarily for the ballistic missile defense needs as laid out to support the president's initiatives. The ship provides amazing capability across the board on a wide variety of missions. LCS supports the new acquisition strategy that was presented by Admiral McCullough and Secretary Stackley in the fall.

The Congress then delineated that an RFP has gone out; we expect to select one contractor in the spring for 10 ships and down select to one whole form probably by the summertime, and that is this revised structure. And then the first 10 ships would go to the first contractor, and the next five to the second contractor.

The LPD 17 LHAR are funding in '12 and '11 with a split funding of the LHAR per OMB rules. And then MLP is a new designed ship added to -- as we've modified you'll see -- as MPFF future is not listed. We're going with the MPSRON plan, and the Mips Ron will eventually morph into LMSRs, TAKEs and MLPs.

And this a new designed platform based on an existing hull form BP tanker modified for a low freeboard ship that will basically allow us to offload instream, be able to float on and float off equipment or other items or even LCACs. So the experimentation will be quite interesting as we step ahead to be able to operate the MPSRONs with this new designed ship. And lastly is the JHSV, as you can see has continued on as a joint Army/Navy buy, and then we ramp up to two a year in '13 to produce this ship as greatly demanded by our combatant commanders. Next slide.

Aviation quantity. We see we have 206 aircraft in '11, for a total of 1,006 across the FYDP; the Joint Strike Fighter split between Navy and Marine Corps, as delineated. I draw your attention to the F- 18E and F. The profile has changed. And this really is due to a modification of adding the F-18 Growlers in. The secretary of Defense has directed and funded 26 additional Growlers in the Navy budget, two in '11 and 24 in '12.

And this is a multi-prong attack to provide jamming electronic warfare forward with a highly capable platform. This will convert the four Navy expeditionary squadrons, which we're going to decommission, to be rapidly manned with the F-18G to bring them forward in there and create a national force for jamming. Before this, the squadrons are just going to decommission, and those would not exist. All we would have had, the airplanes and the wing. But throughout this purchase, we will end up with four expeditionary squadrons, 10 carrier squadrons, and be out of the EA-6B by 2014.

The E-2D continues on as a ramp-up. We had enhanced procurement of that last year as a result of Nunn-McCurdy review. Congress added an aircraft. We continue to add across the E-2D. It brings a significant capability forward for the battle group integrating advanced airplane capabilities radar, as well as the NIFCA system.

The P-8As. We continue to produce this highly important plane for ISR, as well as anti-submarine warfare. In the middle, you can see the significant level of purchasing. As the secretary of Defense talked this morning, or early this afternoon, rotary lift is important. Navy and Marine Corps is also purchasing that, with -- continue to buy the attack helicopters, the V-22, and then the Romeos and Sierras for the Navy.

And then, at the bottom, the Navy is also in UAVs; we have a large number of smaller programs in the Navy and Marine Corps. But our larger ones are the Fire Scout vertical-launch UAV and the BAMS, which we have already -- (inaudible) -- across the FYDP and ramps into procurement by '14.

Next slide.

Missiles and munitions. We continue to purchase the right mix of ship and aviation weapons we need across the FYDP. All the weapons are above MSR except for TACTUM, which is at MSR.

The only other one is the Mark 54 torpedo, which has had some reliability and growth issues. So the FY '10 contract will be let in the spring, and that'll actually cover an FY '11 contract to purchase those torpedoes and then build us into a ramp across the FYDP.

Next slide.

Marine Corps ground equipment. This is truly a program in transition. The four largest programs are what I have on the slide. At the top you see the EFV, expeditionary fighting vehicle. It brings the ability for the Marines to operate from over the horizon.

In this budget, we've elected to maintain the R&D and slide procurement one year. This is based upon the commandant's desire that he wants to carefully assess the program through a series of experiments. He feels it's the right capability, but he is not ready to move forward with full-rate production at this time. But he's committed to getting it right.

The LVSR, as you can see, as we ramped down with the last year of full procurement, the small amount of money after that is to maintain field changes to the equipment.

Joint Light Tactical Vehicle is another one that is in R&D and then ramps up at the end of the FYDP in Humvees. We track off of the last procurement in '11, and then money in the out years, which will be a variation of the Humvee, the specifics to be determined.

All of this is laid out further with -- the Marine Corps have a ground-combat tactical mobility portfolio, which I'm certain you'll hear about more at other Marine Corps briefs.

Next slide.

Research and development. As I indicated, this program is down. The actual basis of science and technology is not. We have maintained the levels from PV '09 to PV '10 to PV '11, that base funding 6.1, 6.2, that gives us the future technology desires and the needs we have to have are still funded.

What you're seeing is a change in a significant amount of tradeoff, as items for Joint Strike Fighter, the P-8s and other items move to procurement, the R&D levels drop off across that. We are still continuing, though, to work for the advanced submarine and other items, as well as the DDG-1000, finalizing its combat system and some other testing for the three (holes ?) we have.

Next slide.

Military construction. This account is relatively large for the Navy-Marine Corps team. I'll have two slides on this one. The next one, you'll see what I call is something moving -- an animal moving through the snake here of Marine Corps construction for Grow the Force. But you can see in this upper left here is significant amount of Marine Corps procurement for construction for Grow the Force, other initiatives. And the Navy is typically somewhere around usually $1 billion. You have the end of the BRAC construction in red and then ARRA funding.

On the lower right, what I draw your attention to is family housing. Although it looks like it's a downsizing, this actually masks or continues on the program of private-partner venture, PPV. Having lived in a PPV house in Hawaii before I came here, I'll tell you, it's an outstanding initiative.

And having seen the housing in an area like Pearl Harbor that was, when I was out there 10 years ago, when I was preparing to go to command, there were a series of older homes that were just about there when Halsey was there to what we currently have, for what looks like a very modern U.S. suburb, is a tremendous program. That is also, though, funded in the BH account.

So what you're seeing here is actually just the funds to maintain the approximately 14,000 homes we either own or lease around the world. The slight increase from '10 to '11 represents 1,000 homes being picked up in joint basing, primarily on Guam, but other places, as the Navy has taken over some Air Force bases. So some of the small amounts are transfers in, and housing is one of the areas where it's a transfer in.

Next slide.

I talked about looking at our MILCON from about a 13-year portfolio. What you can see is that we have a base program, a little over a billion dollars across the FYDP in the Navy. The Marine Corps has a program. And there's that significant growth in the middle, and that's the Grow the Force, as they were trying to update their bases, facilities, housing, gymnasiums, as required to support these young Marines. There's that significant ramp-up that falls off.

You can also see the completion of the BRAC construction and then what I call a Guam wedge, which consists primarily of the relocation of the Marines in Guam. But there's also about $1 billion across the FYDP laid in for the PACOM Marine Corps training initiative, which will not necessarily all be in Guam, but in the area. It's a study and then follow-on building to have ranges in the far western Pacific to train our joint force, starting with the Marines.

Next slide.

We have overseas contingency. I've laid out a number of columns here, but try to make it clear. I have the FY '09 appropriated. You can see it's $17 billion. Then you step over; there's really three columns for '10. We have the '10 that was approved by the Congress already for $14 billion, and then the FY '10 supplemental, as you heard earlier today, has gone over with this budget. And Mr. Hale indicated we need that appropriated by Memorial Day weekend, about, to continue the forces operating.

This really reflects a couple of items. One is the Marines going to Afghanistan. Two is the increase in fuel prices, which is significant. And three, the largest part for the Navy is right now we're at about 33 ships in the Middle East, and aircraft carriers are flying tremendously.

Before the war started, an aircraft carrier typically flew on deployment about 80 percent of the T&R matrix, training and readiness, which would sustain them during their deployment. Routinely, since about 2002, we've been operating at about 125 percent; so a little over 100 percent, because you're flying missions, flying the full capability.

Now that we're back in Afghanistan, we're flying about 188 percent of the T&R matrix, and have been now since last year when I was in Hawaii. That ramp-up is there. In fact, Reagan one month peaked at 205 percent. There is a tremendous demand for flying.

Many of you may remember seeing a slide, probably about five or six years ago, when we showed four F-18s flying the equivalent from New Orleans to Chicago or Minneapolis to deliver ordinance and support our Army and Marines. Well, we got out of that business and we started flying an average flight to Iraq that was from about New Orleans to Arkansas.

Well, we're back in the business the other direction. Our aircraft carriers are in great demand. We fly a significant percent of the flights. And, in fact, the aircraft carriers -- (inaudible) -- for more than about four days, so we have adjusted our carrier schedules so they come in and overlap directly in the North Arabian Sea, not at chop line south of India or in the Red Sea, because we need to have that carrier aviation present. That really reflects the demands here that are being placed on our forces to be forward and carry that fight, as well as the longer flights for our ground squadrons that are over there and the Marines flying.

And the last column you can see is 18.5. That represents that same force carried forward, because we've seen no fall-off in the Navy-Marine Corps mission. Once again, the Marines have dropped down in the numbers. The Navy has not seen a change. We have eyes in Iraq. We have eyes in Afghanistan. The number of people and the demands on the Navy in this area of this world is not changing. So as a result, the budget reflects that.

Next slide and last slide.

I hope, through this, I've tried to lay out for you that the Navy and Marine Corps were created as expeditionary forces. If you remember back that during the Revolutionary War, our ships were actually sailing all over the Atlantic. And, in fact -- (inaudible) -- engaged near England. The Barbary pirates were actually operating in the Mediterranean. So even a small nation had a Navy with a big heart, and forward operating.

And it's been that way then, it'll be that way in the future. We are a robust force around the world. We'll be engaged. Whether it's the operations off Haiti, whether it's the Pacific partnership or whether it's combat operations, the Navy-Marine Corps team is forward and engaged, conducting exercises and training around the world.

So, subject to your questions, that completes my brief.

Yes, ma'am.

Q Can you talk a bit about a possible multiyear on the F- 18/EA-18 fleet?

ADM. MULLOY: The specific thing I can give you was Congress did authorize a multiyear, and they authorized us to expend up to $108 million. But that did not come with funding. So the Navy is evaluating the opportunities, especially given that we now have -- the Gs have been bought. The F-18E and Fs moved to 13. It presents some opportunities.

But there's nothing I can talk about this day. One is, it's not in my role as budget officer; it's within the acquisition world. And two is, there is no money for multiyear right now. It's not part of the plan. But that door has been opened by Congress, and we're looking at that door.

Q Do you expect there to be a decision in the next month or so? They had mentioned something about --

ADM. MULLOY: You know, I don't know, but I'd be happy to take the question from Lieutenant Ferrari to go to RDA on that one. I don't know if it actually changes budget. I do know they're in negotiations in RDA. But that ends up being somewhat confidential discussions.

Yes, sir.

Q There was some concern about not being able to keep two- year for Virginia class? Did you -- what kind of tradeoffs did you have to make to achieve that?

ADM. MULLOY: You know, what I would say is that there's been tremendous tradeoffs in this budget in the puts and takes. I've been in the building. I got here in May as the programmer for the Navy and relieved as budget officer. I have seen -- if I had to account for how many slash plans there have been developed since May 8th, when I relieved as programmer until right now, it would be taller than five New York City phone books.

So everything's been in flux. Everything's been in trade. The evaluation came back again to being as two things.

One is, tremendous value for the dollar, is that that program is a hallmark for, not only with the Navy but that our Department of Defense, about a program that I will tell you, having been on one, is the first one took almost seven years to deliver. The last one's been about five years, the cost, the delivery of the ships, and they deploy right away.

USS New Hampshire, who was just built and commissioned last year, from the day it got commissioned, the next day it got underway and went down to Florida to do prospective commanding officer operations, some of our most difficult operations with multiple submarines and weapons in the water. It then went on a deployment and it just won the Battle "E" So that's a new construction submarine that won the Battle "E" in the first year. That's telling you it's a highly capable submarine with a very capable crew.

The other point is, Virginia Class 1, because of the missions they bring forward that we're not allowed to talk about. There's a lot of discussion about covert forces and a lot of idea of people around the world. I assure you, the submarine force is fully engaged. This is not, as some press reports is, it's a Cold War relic. Our submarines are extremely well designed with advanced electronics, and they're able to engage as necessary around the world. They're in tremendous demand by all the combatant commanders. So that was where the trade out and the playoff was, a great ship with a mission that's valid to the joint force.

Yes, ma'am?

Q Question on the LCS. The requirement is 55, and in the shipbuilding plan, after 2019 you're building one per year, so when do you get to 55?

ADM. MULLOY: The shipbuilding plan is developed by a different part of the Navy. I'm focusing on the five years, so I can honestly say I do not remember looking at the data table. The goal is there, and in fact I remember they have about a 20 or 25-year life and they will -- we will continue to buy more, replace the ones here. It's a steady ramp-up in procurement, but there is an end in sight, but I'll have to get back to you with Lieutenant Ferrari on the exact year.

I think it is -- it's producing out of the shipyards we want the numbers we need to fill the force in, but not a rapid buy-out.

Q (Off mike) -- a time when you will go from two contractors? The current strategy is to have a second source. Would you eventually be going back to one source?

ADM. MULLOY: I don't know. Right now it's the two sources. I do know that you do have an issue that -- talked about, was if we rapidly buy it out and then they all retire quickly, you get into block obsolescence and the chance that you can't -- you couldn't change them again. So there's a number of competing factors in there. But the bottom line is to have two sources and maintain a steady hold to develop the ships. There's a tremendous need out there for them.

Having operated in my previous job, was out in the Pacific fleet, I visit every country in WESTPAC and was in Southeast Asia frequently. And that style ship would provide us a lot of options to go into places we want to go to, and expand our operations in -- (inaudible) -- as well as Africa Partnership Station. Right now we have to send an ASR to -- you know, limited ports. A DDG won't go to Cambodia. They won't go to Bangladesh. We need to be there. We send our ASRs and small ships. We want an asset that can self-deploy and bring forces and do training. So it's a significant asset for us on the prepare and deter area.

Yes, sir. Over here on the outside.

Q: Admiral, SOUTHCOM released a couple of ships from the Haiti mission today, but a lot of them are still down there. I wondering if you, from your budgeting perspective, have any indication yet about costs for that operation, or whether the Navy will need any kind of additional relief from Congress to pay for all the steaming days and flight hours that's involved.

ADM. MULLOY: Well, right now our burn rate was about $3 million a day. We're in constant negotiations with FFC and SOUTHCOM in terms of piling up the bills. But I mean, that's contingent upon the various mix of ships.

We are looking at that, but right now what's actually going on is the mix of ships is changing. One ship that showed up down there is the Cornhusker, which is a crane ship. Not particularly a high-end sexy ship, but when you really have a pier that's on the ground, or the bottom of the ocean, you really need a crane ship. So it's been the mixes, the right flavor.

The secretary, and I think Admiral Mullen, mentioned it's not so much leaving Haiti as transitioning. When you needed a ship on the night of the earthquake to go at 31 knots and not need to be refueled and provide a giant airfield, when you have nowhere else in this country to land and you want to bring a lot of helicopters, pretty much an aircraft carrier fills that need for an unusual circumstance.

But after a while an aircraft carrier is a very large asset that once you stabilize the country and you get ground troops ashore, and you can find air bases where you could then quickly deploy with tents, there's other solutions to that. So that's one of the changes there. And the others ones are you bring other ships as you need.

So we're in constant negotiations. There was a supplemental -- or not a supplemental, but a reprogramming from OSD for $400 million for a docker which the four committees in Congress approved last week, which will provide stopgap funds for SOUTHCOM to pay for the Army, Navy and Air Force and Marine forces. Beyond that I've not seen any discussion. That's a good question for the Comptroller.

But we are looking at, what would this be long-term, but right now we're just happy to be engaged and bring those assets as requested by the country or SOUTHCOM as they need, and we bring the wide-ranging assets our Navy and Marine Corps team have.

Yes, sir. Right here with the tie.

Q Admiral, it looks like -- I think you said the MPFF is dead now.

ADM. MULLOY: Yes, sir.

Q Are these ships in here just to keep the current pre-positioning forces alive? And explain to me the ship-to-shore connector? Is that transformational craft?

ADM. MULLOY: Well, that's actually -- okay, a couple of questions. The ship-to-shore connector simply is the LCACs. That is the son of an LCAC. So we're SLEP’ing a percentage of the LCACs, and then we're building a new but basically similar design. It's going through the two-pass, six-gate process in the Navy right now. The first one will be constructed in R&D. So it's basically a modernized LCAC.

The other question was, through the QDR and reviewing what is required for forcible entry, the decision was made from one very large expensive MPFF-type squatter to go to maintain three MPSRONs, and then over time modify them to consist of LMSRs, TAKEs, and there's MLPs, such that if you've ever seen one of the very large Bob Hope-class designed ships, massive ramps in-port, but in reality you could drop a ramp on a different ship. This MLP would be a ship that could be alongside, a ramp comes down and you're delivered to it, and it drives ashore.

So it is somewhat of an experiment. We're looking forward to working with (inaudible) as we develop the concept. But this would be a low freeboard ship, somewhat similar to the Blue Heron that brought back the Cole, or took the SBS6 out to Hawaii, to where it's above- board but can drop down and pick up heavy items. So it could be heavy or light, and also pre-position itself. It could drive in or then transition things.

Q (Off mike) -- more training ships? That's a new --

ADM. MULLOY: Okay. Those we actually have two. That's an actual naval and nuclear power training asset. What we're doing is converting two of the 688s that have been refueled but running out of hull life at 33 years but still have substantial reactor core left. That's how we train all of our Navy nuclear personnel. Those two ones that are the older SSBNs in Charleston will be replaced by two 688s.

And so what happens is, I believe the La Jolla is the first one, it will go to the shipyard. They remove part of the weapons systems, put in training up forward where the crew's mess is. But you maintain the reactor plant intact and you modify the screw to what we call water break, so they can operate at lower power and then train Navy nukes, and it will remain in Charleston.

Yes, sir, in the front.

Q: How much did you save by canceling the CGX in the five- year plan?

ADM. MULLOY: The CGX? You know, I don't really have that number because it ends up being a transition. The last budget that had a full profile, it was the PB-9. At that time the ship wasn't nuclear powered, didn't understand BMD. So I don't have a number for you on that. It is whatever money was laid in that plan was harvested out of it and except for -- now some of it, of course, in terms of radar transitions over to the AMDR and some other portions, but I don't have a number for it. It was merely rolled up in our SCM plan.

Q: SSBNX, what's the FYDP research bill? Because at like $6 billion or something?

ADM. MULLOY: No, across the FYDP is -- do you remember what that number was? It's about an average of -- yeah, it is. Probably about -- well, no. Between three and four? I'll get you an exact number. It starts at about $600 million (dollars) and it may ramp up. Yes, so I think it's pretty close to $6 billion. It's in three parts. You have the weapons -- you have the reactor components, you have the HM&E we call hull, and the missile compartment.

Q Does it concern you that this is going to squeeze out a lot of surface ships when it comes to actually buying this vessel?

ADM. MULLOY: Well, that's really outside the FYDP, but there is a concern that when you actually come to the cost and the production, part of that would be working with OSD in terms of what's the total size of the SCN budget in the out-years. But it is a matter of -- it is well laid-out in there, and I think the 30-year shipbuilding plan will be going over early this week to Congress, and discusses this. This is -- we look at it as early-, mid-, and late- term plans.

In the back.

Q Admiral, you mentioned that the cost of air operations over Afghanistan is significantly more than Iraq, and I'm wondering, is that increase going to be entirely covered in this budget in the supplemental, or would you expect the aviation community to be making up some of that through decreased operations, flight hours from non- deployed units?

ADM. MULLOY: The goal is in FY11 it's fully funded. In '10, because we're actually operating and we don't have it now, there are -- they are taking a prudent look at what costs we have in terms of the total fuel price. So in '10 there is -- when we get to supplemental we'll fail to fully fly. FY11, the full year is funded at the full amount, with the estimated fuel cost in there for the full hour. So in '10 I think we're adjusting as necessary as we ramp, waiting to get the supplemental when it comes through.

Lady in the salmon.

Q The Navy secretary has laid out a lot of ambitious plans on energy, but I understand there was an energy office that was supposed to be created but isn't funded. I wanted to check that with you.

ADM. MULLOY: There is a small energy office that we created in the FY11 budget with the secretary, and I think he's changing around some of his staff. I don't know about what's in FY10. I do know -- and Lieutenant Ferrari can get you the amount for FY11 -- we do have $174 million added in the FY11 budget for a variety of sea, air, and shore maintenance, and the secretary added $1.391 billion across the FYDP for energy plans. Once again, shore, sea, aviation, and the Marine Corps programs.

So there is an energy office. I think it's in transition. It is funded later on across the FYDP with substantial steps ahead.

Q (Off mike.)

ADM. MULLOY: In '10, I don't know but I'll get back to you how much was there. Because when I do this budget, when I'm the budget officer, the only column I can address with a budget is the '11. In '10 we'll fix it in -- as we say, fix in execution. I know he was revamping, but we actually added personnel in the out years.

Yes, sir?

Q Yes, Admiral. Can you tell me -- you talked about the cost increase of air operations in Afghanistan versus Iraq. Has the Navy's share of those air operations also increased? Is that part of the reason you're seeing a cost increase?

ADM. MULLOY: You know, I don't know about the total ATO operations. I think we're still maintaining about 40 percent of the operations. What I'm really seeing is that the cost of delivery has gone up because you have a seven-hour flight and not a three-hour flight. You have to be tanked twice rather than once. So I don't think it's a change in the mix.

I think it's they don't want us to go down, and the issue is when you don't want to go down, when you think about the delivery of -- you know trucks delivering around this country, in my case deliver airplanes delivering bombs to Afghanistan, requires a lot more planes and a lot more people going back and forth constantly to keep the same level of effort is what I believe is going on.

Yes, ma'am. Right here.

Q Is there a little bit of money in FY '11 for a NUCAS and an even smaller amount for the medium endurance “marin-ized” UAS? What's that going to look like to the set up and how quickly they'll ramp up?

ADM. MULLOY: Well, the desire would be ramp up faster, but there's the art of the possible. You remember the secretary talked about beware of exquisite systems. We've had some real trouble with revolutionary. The current money you see in NUCAS goes through 13, into 14 slightly. It does ramp down. That's a test which is continuing on the NUCAS. I've done the ground taxi. We expect to fly later on and eventually we will land and then on aircraft carrier tank off and on off other NUCASes. That is really just a test bed, one contractor, one test platform. Across the end of the FYDP in the last three years is a ramp up from three to seven to a billion dollars, a significant ramp for a follow on design which is still going to be studied. As to whether that is -- what exact missions in the within the air wing it would take, would it be the next generation fighter, or is it a mix as to how high end it would be?

So that's a substantial ramp up but it overlaps with this demonstrator ending, and then shifting from the one company demonstrator to a competitive follow-on system where the Navy is, and I think we end up being a little bit slower than the other services because of the greater demands. If you think about trying to land the UAV, which is, you know, a follow-on to radio operated airplanes, but they get bigger and more complex, but it's still landing on an airport than hasn't moved as opposed to a ship moving at 22 knots through the ocean pitching, tremendous level of heuristic programming that goes into make something capable of landing on aircraft carriers orders of magnitude different in terms of stability and landing, same with landing -- what we have to train our pilots through.

So the ability to have it operate its own is rather than try to bite off too much at one time. The secretary is letting us complete the transition and then put that money in, which we think is a significant ramp across the end of the FYDP.

Yes, sir.

Q Sir, how would you characterize the cancellation of the EPX? Is it just not affordable or the wrong solution?

ADM. MULLOY: I think -- you encapsulate it faster than anyone who did a slide through multiple briefings. It was an expensive option that brought an awful lot of people to bear on an airplane that if you look at the bands, the P8's and where we're going with architecture as a CNO reorganizing aid staff or information dominance, we thought there might be a different solution in there rather than having a cookie cutter. Once again, you know, the inverse of the exquisite solution is fine. A better solution. This is one that played itself out. As we think for a short delay we may come up with a better fit that may look more like it, but you know, the ability to bring linguistics and signal tuning, electronic -- you know, electronic operations, you know ESM ahead was a different solution out there and so that's what we've done. We've shut down that office and opened up another study.

Yes, sir.

Q: Admiral, the Navy is expected to release its updated master plan for unmanned underwater vehicles later this year. Is there anything in this budget that anticipates what that change in priorities will be?

ADM. MULLOY: Well, there already was money in a large number of unmanned vehicles in EASW world, and primarily mine, I think, but as a specific initiative eleven, the Secretary of Defense added $99 million to a study of energy and unmanned control across the FYDP here to target new design and so some of that will be revealed on exactly where the Navy will put that money and to -- you know, what institutions, but there is an interest in it.

Once again, the Navy is somewhat of tremendous interest in unmanned platforms, but the maritime world we live in is you're hosted with a lot more technological solutions that you could easily spend a lot more money than you want to when you try to make the thing be able to operate, made -- power density under way, be able to come back and find it. So we're actually looking at a plan that lays out there in both our air vehicles and our undersea vehicles.

Yes, ma'am.

Q You mentioned the corps is almost completely out of Iraq and is ramping up operations in Afghanistan. One concern has been resetting the equipment. How is that addressed in this budget?

ADM. MULLOY: That is reset through the Marine Corps account. If you look in this -- the contingency count with terms of procurement for the Marines, if I go to Slide 16 here, you'll see is that a significant amount was -- we had $2.36 billion (dollars) in '09 -- '10 was reflecting a drop down as we thought, a total of it, you know, might be drawing down, and then in '11 it goes back up again. A significant part of that is repairing or buying new for the Marines as well as. So there's a total of almost $5 billion (dollars) provided to the Marine Corps in the past two budgets of equipment to procure a ramp, about $4 billion (dollars) for the Marine Corps ground, and about a billion (dollars) for their aviation, part of the Navy, and expectation of more of that to follow.

So that is more equipment than is required for those individual MEFS and MUES to deploy. What that is, is resetting some of the equipment coming out and purchasing for that that was lost or damaged or past service life. So a substantial amount of money. Almost $4 billion (dollars) over the last two and a half years for that and more to follow as the equipment -- as we demonstrate the need and see what the level of use is over there.

ADM. MULLOY: Okay, sir. Right here.

Q In the ship building procurement, you've got total new construction for 13.8 and then you have an additional category, which is not really defined. It seems to be other stuff. You have oceanographic ships. Is that an entire ship?

ADM. MULLOY: Yes, sir. This would be two, purchasing of replacement we call TAGS, T-A-G-S, for hydrographic ships which --

Yes, sir.

Q (Off mike.) Why -- why is it no ship included in the ship building?

ADM. MULLOY: It just goes back down to being the rule. I mean, you could, but since it serves a -- that particular function, not as a combat, but it's a weight-hull vessel, it is -- it's considering that other account. It is purely a bookkeeping manner.

Q How much is that ship?

ADM. MULLOY: I'll have to get back to the amount account.

Q I'm looking at this and it says -- now your ship to shore connector or the other one? The LCAC R's one ship, but the funding comes out of a different category or RDTEN, right?

ADM. MULLOY: Right.

Q So you've got four LCAC's, four LCAC SLEPs, and an oceanographic noncombatant ship for $2.3 million --

ADM. MULLOY: And -- okay. There are significant -- (inaudible) -- cost to complete individual lines. There's what we call cost to complete, and ship outfitting, this paying for the ships to be delivered in '09, '10, previously even some ships in '08, so there's a substantial amount of money that's below -- I would call below these lines. It adds up. Below the four lines or five lines you see listed before you get to the total, we can get you a detailed breakdown of the SCN account and the budget.

Q Is there one in here that's not here?

ADM. MULLOY: Yeah. There's another other line that is cat -- a tremendous number of cats and dogs that make up the total ship outfitting account.

Q (Off mike.) -- about NG 51s, you've got eight ships through fifteen. (Off mike.) Are these straight DDG 51 repeats or is this a modified design and is there --

ADM. MULLOY: This is -- this is a straight DDG 51 in this line. The intention of the other portion laid out of another study done as part of the QDR -- (inaudible) -- directly was we call the radar study. The Navy along with OSD looked at the total options for -- of ballistic missile defense in the new world which included a DDG 51 hull form, a DDG 1000 hull form. The AMBR radar the VSR radar, the total ship competing environment for the DDG 1000 and the advanced capability billed of the Burke design, in the end, it was -- as they looked through and then reviewed by a senior studies group was the AMBR radar provided the right level of fidelity and DB for the feature to be able to track, you know, either maneuvering contacts, other contacts. The right follow-on so therefore was an AMBR radar. Could be on either hull. The Burke class provided an option for -- essentially would be cheaper but more flexible, producible quicker. You have the Spy 3 radar from the DDG 1000 and then you have ACB fire control from the Burke.

The net effect is it will fit on Burke hull form. It may or may not require a small plug. It will require a little more cooling and some structure because it's a 14-foot array opposed to about a 10-foot array on (inaudible) now. So a bigger radar array will fit on a Burke. That first ship is scheduled -- and the goal is '16. So there will be money that's in there now for the MDR radar. In fact there's $115 million was added by OSD and '11 to what already existed at AMBR to go to three contractors to look for AMBR. The Navy in POM 12 will have to add more money to get there -- to get to a ship by '16, but the goal would be to get designing by '14 and a ship -- one of the Burke's in '16 will be the new designed Burke, essentially, but whether you call it -- it's not really called future combat ship. It's our radar study ship is essentially what I'd call it right now to be determined.

Okay?

Thank you all very much. Appreciate it.

http://www.defense.gov/transcripts/transcript.aspx?transcriptid=4552