TAB H

Dear Mr. Chairman,

The four-year, twelve-ship DDG 51 proposal contained in the FY-98 President’s budget offers a rare period of surface combatant program stability. At the same time, it has caused us to accelerate somewhat our normal timelines for out-year surface combatant SCN planning. In particular, the Congress has expressed interest in three areas: possible expansion of the multi-year to a thirteenth destroyer: the role of the Maritime Fire Support Demonstrator in transitioning to DD 21 (the surface combatant to allow the DDG 51 class(; the likelihood of a significant Aegis cruiser modernization effort. the purpose of this letter is to respond to this interest, while acknowledging many programmatic details have yet to be refined.

First, with respect to possible expansion of the DDG 51 multi-year proposal, we have included in our FY-98 budget request as many ships as our funding authority would allow. Clearly, the multi-year approach, when applied to a successful and mature program like DDG 51, contains substantial benefits and savings. Acceleration of an additional DDG 51 award into the multi-year window would increase the total savings while addressing validated surface combatant requirements. Before Congress authorized the multi-year buy, the average constant year cost for a single DDG 51 was $950M. The marginal cost of an additional DDG in FY-98 is $720M--substantially less than the other three ships in that year. I would welcome such action by the Congress.

Second, with respect to the Maritime Fire Support Demonstrator, we anticipate substantial benefit in terms of acquisition reform and technology advance swill accrue to DD 21, as well as CVX and future ships. Our partnership with DARPA and industry is producing results well beyond initial expectations. It was just this success that prompted us to expand the application of the original Arsenal Ship concept so we could capture more completely the advantage so this unique program. DD 21 must be a ship responsive both to twenty-first century requirements and fiscal limits. We are seeking revolutionary advances in joint connectivity and responsive, precise delivery of ordnance to realize our objective of offensive distributed firepower for the surface force. At the same time, DD 21 must be affordable in the numbers needed to replace existing destroyers and frigates. If we do not break with historical norms of design, construction and life cycle costs, I am convinced we will not be able to build the right capability in the right numbers, at the right time. The Maritime Fire Support Demonstrator holds the key; I urge your active support for its continued funding.

With respect to modernization of the Aegis cruiser force; Quadrennial Defense Review deliberations revealed the need to perform a mid-life conversion of these superb ships. Our objective is to package Theater Ballistic Missile Defense (TBMD), Area Air Defense Commander, Land Attack and Smart Ship improvements into a class-wide upgrade, thereby assuring a preeminent role for Aegis cruisers into the third decade of the next century. This modernization program will enable otherwise unaffordable acceleration of TBMD and Land Attack introduction into our surface combatant force, while providing critical industrial work prior to full rate production of the DD 21. It is our intent to commence feasibility studies in FY-97 to permit and FY-98 modernization program start should congress make FY-98 funds available.

Together, the DDG 51 multi-year, Maritime Fires support Demonstrator, Aegis cruiser modernization and DD 21 programs will set the course for the surface navy of the next century. I look forward to working closely with you to ensure their success.

The Honorable Curt Weldon
Chairman, Military Research and Development
Committee on National Security
House of Representatives
Washington, DC 20515-3807

Copy to:
The Honorable Owen Pickett
Ranking Minority Member

The Honorable Duncan Hunter	The Honorable Strom Thurmond
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