International Security Program at csis. And im delighted to kick off the Maritime Security dialogue with vice admiral moore. This is acosishosted series. And it seeks to highlight current thinking and future challenges facing the navy, the marine corps and the coast guard. Today represents our second dialogue for 2017 and we look forward to welcome you all back for additional events throughout the year. We would also like to thank in a special way, Lockheed Martin and huntington engles in make this series possible. And before we get underway for big events like this we also like to make just a brief announcement. Safety announcement. We dont expect any difficulties, but should there be anything as convenor, make sure you know, we have exits here in the back on both sides and stairs down the front and both myself and anthony bell in the back will be your responsible officers to direct you in the right way just in case anything should come up, just look for one of us. So for our formal introduction to get us started, i will turn over to vice admiral peter daly, retired, the chief executive officer of the u. S. Naval institute. Were happy to have him here and partner with us i. Okay, welcome, those who dont know me, pete daily, ceo naval institute. We are proud to bring you this maritime dialogue series continuation in our third year and as mentioned, we give special recognition to our sponsors, huntington engles and Lockheed Martin for make this event possible. Our speaker for today, 1981 graduate of the academy, also holds degrees from George Washington university, and a Naval Nuclear engineering degree from m. I. T. After serving 13 years as a Nuclear Propulsion qualified Surface Warfare officer, he made lateral transfer to the duty officer community. There he served and focused on refueling, complex overhauls of Aircraft Carriers. Major command include Major Program manager for inservice Aircraft Carriers and Program Executive officer for submarines, peos, subs. Finally last year in june, vice admiral tom moore assumed command as the 44th commander as navc. I point out there are 77,000 employees of navc. It is responsible for the contracting and supervision of all navy and sub ship building and the maintenance of all those ships directly. We welcome the admiral who controls one quarter of the navy budget. [ applause ] thanks, pete. Im always reminded of that, by the way, you have one quarter of the budget. Thats not necessarily a good thing. Good morning and thank you for the invite this morning. Last night but a big night for the navy. Number one, my band played on the waterfront. And then what was the other thing that went on last night . The other thing we delivered the ford to the navy. Kind of a big night for us. It was a big night for us having worked on ford for most of the past 10 years. Just came back from a successful acceptance trial and the navy accepted delivery of the ford last night. You heard it here first. Thanks for the opportunity to come talk this morning. The theme that i was given was the maintenance challenge and how to reset the fleet. So what i would like do is talk about this in kind of the context of where the cno is headed and the size of the fleet. And what we are doing to grow the size of the fleet on the Construction Side and then talk about how the maintenance side of the equation fits in. It is not either. You have to do both. So sometimes we tend to forget about that, having been a ship buildi builder for most of the last 15 years, but having spent most of the last year on sea readiness, i am well aware of that to do both. If you have not read the sea notes white paper, it is a good read. A short, it has pictures in it. It is great for command master chiefs. Their lips do not get tired when they read it. And the cnos white paper talks about what the current security environment is. They make three key points. They are applicable whether you are talking construction or whether youre talking the maintenance side of the house. The three key points are time matters. There has to be a sense of urgency in some of the things were getting after today. That applies across the board. To figuring out how you design these ships quicker and build them quicker. The pace today is exponential. If you look at the world and the threats that were facing, the learning thats going on in our competitors, say, russia and china, and the pace they are changing their capability is growing establishment growing exponentially. It is like we went into halftime up 283 and said the game is over. The referee said halftime is over, we said, we will get there when we get there, and strolled out through the Third Quarter to find the score was now 2824. That capability gap between us and our competitors has really closed and its a really keen interest to us on the navy side of the house in terms of what is the capability we need Going Forward. There is a lot of discussion going on about, what is the navy that we need . Not necessarily what is the navy we need in the 2040s but what is the navy we need in the 2020s . We are trying to figure out, what is the navy that we need in the mid20s. And go make some decisions based on kind of that navy we need in the 2020s. There have been a number of recent studies some done by the navy, and some by independent groups about what is the navy and what should it look like . They have various mixes of ships and stuff but in the end they all came to the same conclusion we need a bigger navy than we have today and they are all around the 340 to 350 ships. Clearly the size of the fleet matters and the capability of the fleet matters as well. How do we get there . When we talk about the size of fleet and i know ill get questions about how the 18 budget didnt add a bunch of new ships, what happened . We were never going to be able to turn that around overnight. I think what youre going to see and ill get to it later in my remarks is the 18 budget holds what we have on the new Construction Side but makes a significant investment on the ready new zealand side of the house. If you listen to the vice chiefs testimony, he says the first dollar we get should go to readiness. I think thats what youre seeing in the 18 budget. We spent a lot of time talking about the strategy, the future navy white paper, it all goes to what the navys strategy is Going Forward. And its easy to say having been in washington, d. C. Now since 1999 i tell people im on my 18th palm which is kind of hard to imagine. If i had a dollar every time someone said we need to build the Strategy First and the strategy will drive the budget. In the world that we live in that sounds great but the reality of it you dont want a budget completely driving your strategy but you cannot ignore the fact that we live in a fiscally constrained environment. What we like to say is we have a resort informed strategy. We will increase the builds of the ships we have today. We think the Industrial Base can probably build in the next seven years, 29 more ships than we had in the original 310ship plan. We have to figure out where the curve of the dollar is, and we have to figure out how to innovate, and what we are going to work on the new Construction Side of the house. We will continue building edgs, the amphibs that we have today. There is ongoing discussion on lcs and the frigate that is still kind of churning around inside the pentagon and we owe some answers to the congress here later in the summer on that. As we head out further out and if you heard me talk about this future service combatant, thats going to be critically important as well. The new buzz word inside navc and the pentagon is s. W. A. P. , space, weight, and power. As we go toward the future navy, i can tell you that one of the things that is really important as we build these platforms, is to make sure that they have enough space, weight, and power so that you can modernize and adapt to future threats. We are in an age of electric ships and fordclass carriers are prime examples of building in space, weight, and power into the platform so you can adapt and go forward. And interestingly, the ddg 51 class which is around today and serving well, we are going to provide a little bit more space and a little bit more power in that Going Forward and those ships are kind of unique in their ability to stay around. It was interesting, my First Department head was on the uss cunningham we used to get rid of ships around the 25year point. We didnt do maintenance. Anyone who served on a ddg knows they were tough to maintain. But we didnt spend any money at the maintenance side. At the 25year point people would think we need to get rid of these things because theyre rust buckets. The reality is, from a common sense standpoint, they were obsolete. Fastforward to today, take a look at open architecture and spy radar and vertical launch and now you have a platform that can stay around a lot longer. So now we have to kind of shift the thought process now. Back over to the maintenance side of the house and now, if you want to get more service life for the hull you have to do the maintenance on it. And admiral daly and i when i first became a flag officer in 2008 we had kind of reached this epiphany where we had not spent any money on doing maintenance for about ten years and we woke up one morning and realized we are failing auto these in serves we do not have ships to get to their expected service life. In hindsight, it does not take a Rocket Scientist to realize if you do not make investments on the maintenance side, you cannot get to where you want to. We had gone for 10 year saying. Not doing maintenance and saving that money is working. The reality is we were consuming the service life of the ships that was built into them and it caught up with us. We spent the last eight to nine years digging ourselves out of that hole. One of the key components of getting out to the size of the fleet that we need is taking the ddgs and the cgs and the amphibs we have today and extending the service lives of these ships. Most of them are in the 35 year range. What would it take to get them out another 10 years . For a steel hull, if you do the maintenance, you can get the service life out much longer. And with todays open architecture and vertical launch i think theres great opportunity for us to make the investment. A relatively small investment, to keep the ships around longer than we have today. People say we have never gone with a service ship beyond 35 years but i point out all the time that we have taken aircrafts routinely to 50 years. We know how to do this. And i think what youre going to see is were going the take a very serious look at taking the service life of the existing fleet and extending it out five to ten years. If you do that, and you have seen some of the Structure Assessments which gets us to 350 ships around 2045 if you keep ships at their Current Service lives and build new, we can probably get them from 35 to another 15 years. Will take a close look at that. One of the things i have consistently pointed out as we look at the new frig oooo gat design is we should not design a ship with a planned service life of 25 to 30 years. It doesnt make any sense. We should plan service lives of 40plus years for all of our ships and build into the context, the space, weight, and power Going Forward. The last thing that i want to talk about is the maintenance side of the house. And resetting the fleet. If you heard the vice chief, he talked about the fact that if i have the first dollar i get new dollar i get needs to go to readiness. The good news is the fy 18 budget has about 9. 7 billion in the Fleet Maintenance accounts to do maintenance on our ships and thats good. We need that. Although as i tell the folks we have the resources we asked for now its over to us to deliver. It is important that when you talk about maintenance it is not just resources. Im quick to point out its not just about money and not just about adding more people. Clearly, the 9. 7 billion that we get is going to help us. We need to grow the size of the Naval Shipyards. We are going to grow it to 36,100. Thats where we need to be to deliver the nuclear submeans on time. We are not doing a good job of that. We have had a better year on the carrierside, but 12 of those 17 submarines are behind and we have to turn that around. And so people will help. Certainly the capacity piece of that is important but its not the only piece of it Going Forward. The Number One Mission priority is the delivery of submarines. And the reason its the number one priority is because of the 235 ships i have today a third of them are at nav cs control. So to the extent that we dont get them out on time it causes a great stress on the force. There was an article in january or february where a reporter said that the u. S. Navy for the first time did not have an Aircraft Carrier at sea. Since the First Time Since world war i that we didnt have an Aircraft Carrier at sea. That is a startling statement. Part of that is because we were done to 10 carriers, but another part of that was because the george h. W. Bush took 13 months when it was supposed to take eight months. It wasnt lost on me that navseas ability to get them out on time is critically important. To resetting the fleet and getting the fleet to the size of the free throw thleet that we n. Back to my original comment, we need more people, but it cannot be only about the people. Theres a couple other things we have to do here. Wurngs i got to have the capacity to do the work. And then i have to figure out new ways to train the work force. Kids learn differently than we learned. And the typical time line to get a trained worker by the time you get them in the door to the time they can do something useful is about five years. We got to cut that back. And new training methods so we can have someone turn a wrench and do something useful in two to three years versus five years. We have to think differently about how we train the young men and women coming in today because they learn differently than we do. We need to make an investment in the ship yards to get the work done more productively than to day. Many of our shipyards, some of them are several hundredshipyma them are several hundred years old. They were designed to ships early 20th century and not set up to handle maintenance the way they should be. In terms of capital, improvements in the yard, we make investments in the equipment and place equipment on the order about every 20 to 25 years, the Industry Standard is 10 to 15 years. I have buildings over a hundred years old that i cant get work done. Weve gotta make a concert effort to look at how to set the yards up and have to make investments in our Naval Shipyards to get the work done more productively Going Forward. Finally, youve heard kevin mccoy talk about this many years ago. Weve gotta take the entire Industrial Base into account he here. We do have capacity other places when we dont have the capacity to do the work at our yards. And this one concept we talked about ten years ago is something were going to have to take a seriously look at again. Were getting significant help from eb and hi on submarine news and were going to need that Going Forward. We got a lot of challenges ahead of us, but from the maintenance side of the house, im very encouraged where were headed. We got the resources that we need, a Firm StrategyGoing Forward and well start delivering ships and submarines on time and take a look at how we extended the lives of ships that we have. When you combine those two things together and add that into the built strategy that were going to have, we have a viable forwapath to 355 and may getting there sooner by otherwise just building new. Ill conclude my remarks and be happy to take any questions that you might have. Well, thank you for those remarks and for the audience and for our guest speaker, well start with a few questions up here and then open it up. Well get a discussion going and have plenty of interaction. You know, you mentioned, admiral, that theres this tension between readiness today and build for the future, and you can go back all those 18 ponds or whatever you said you worked on, ask that was probably there on the first one and its probably there today. But one thing that sticks out is the gap maybe widened more than four. The fleets have been running at a very high tempo. You did mention the fleet response plan, but that made more of the fleet more available for tasking. And you mentioned the bilau report, didnt mention it by name, but have we caught up enough . Back in 2008, 2009, corrections were put in place, but it strikes me that both from a maintenance standpoint and from a need for modernization, things are pretty tightly wrapped and its a pretty tough its pretty tough to catch up. How caught up are we . Are you satisfied . And maybe you dont agree with the premise, but i think its a particularly challenging scenario. Well, i think we have made major gains to catch up. I dont think weve completely dug ourselves out of the hole. And we have some numbers over here, i think they would tell you that the recent trends on this is a graded event. Graded event, okay. The navy gonna okay pass for land. Theres a couple aviators out there that got that. I think weve closed the gap. Were almost there, but its one of those things that as we saw before, if you dont once you get there, if you dont then consistently maintain the funding that you can rapidly lose the edge that you had. And i think thats particu