Facing the navy, marine corps and 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 Industries for their support in making this event really this series possible. Before we get under way, for big events like this, we also like to make a brief announcement, safety announcement. We dont expect any difficulties. But should there be anything as a convener, we want to make sure you know weve got exits on the back on both sides and stairs down the front. Both myself and anthony bell in the back will be your responsible officers to kind of direct you in the right way just in case anything should come up, just look for one of us. And so for our formal introduction to get us started, im going to turn things over to vice admiral peter daley, retired, chief officer of u. S. Naval insitituteinstitute. Were happy to have him here. Welcome. Dont know me, pete daley, 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 making 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 that there is over 75,000 uniformed and civilian employees of navc. Navc is entirely responsible for the contracting and supervision of all navy ship and sub ship building, and responsible for maintenance and systems that go on those ships directly. So we welcome admiral tom moore who controls onequarter of the navys budget. [ applause ] thanks, pete. Im always reminded of that, by the way, you have onequarter of the budget. Thats not necessarily a good thing. Good morning and thank you for the invite this morning. Last night was a big night for the navy. Couple things. One, my band played down at 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. Actually from my perspective having worked on general ford for most of the past ten years, just came back from a very successful acceptance trial and board of acceptance survey and 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 with the size of the fleet. Then talk about what were doing to grow the size of the fleet on the new Construction Side. But then, importantly, talk about how the maintenance side of that equation fits in. As admiral daley and i were talking beforehand, it is not either. You got to do both. So sometimes we tend to forget about that, having been a ship builder for the most of the last 15 years, but willing having spent most of the last year on sea readiness. I am well aware that you got to use what you got and continue to go forward. If you have not read the sea notes on the white paper navy, 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. He makes three key points. These three points are applicable whether you are talking new construction or whether you are talking 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 exponentially. We have to keep up with that pace. It is like we went into halftime of a Football Game in 2000 up about 283, and kind of popped the champagne, said games over. In fact the referee came in, said halftime, over, were ready to start the second half and we said well get there when we get there. We kind of strolled out midway through the Third Quarter only to find out that 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 today 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 tend to talk a lot about whats the that ivy we need today. We are trying to take a little bit of a lead angle and figure it 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 does matter Going Forward, and the cape and tability of that f also going to matter. 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 readiness side of the house which i think is, if you listen to the vice chiefs testimony back in february, his point was, the first dollar we get ought to 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. I think thats the reality of where we are today in the navy budget. We will increase the builds of the ships we have today. We think the Industrial Base can probably build in the next seven years, based on the capacity they have, probably 29 more ships than we had in the original 310ship plan. W we have to get more capability for that dollar. Figure out where the knee is in the curve industry. In terms of the dollar. 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. Youll see some things going on in that particular area. 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. If youve heard me talk about before, we go build the future navy. While i cant tell you exactly what it will look like, one of the things that is real,ly, really important for us as we build these platforms is to make sure the platforms have enough spate, weight and power so 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 probably got rid of them at 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 systems standpoint, they had become 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 daley 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 expect the ships to get to where they need to get to. We had kind of gone along happily for ten years saying, hey, not doing maintenance and saving on other things 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. Particularly as it relates to the private center of the service ships, including the ships. 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. We are taking a pretty close look at what would it take to get them out another five, another ten years. The reality is, 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 or 40 years. But i point out all the time, yeah, but we routinely take Aircraft Carriers to 50 years. We consistently do all the maintenance on the Aircraft Carrier to get it to 50 years, so 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 around 355 ships around 2045 if you keep ships at their Current Service lives and build new, we can probably get them to 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 frigate design is we should not design a ship with a planned service life of it 25 to 30 years. It doesnt make any sense. We ought to go plan service lives of 45 years for all of our ships and build into the context, the spate, 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 an unprecedented amount of money for readiness. It is about 9. 7 billion in the maintenance accounts to do maintenance on our ships. 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. That cant be the only part of the solution here. Clearly, the 9. 7 billion that we get is going to help us. We need to grow the size of the Naval Shipyards. 33,850 today. We are going to grow it to 36,100. Thats where we need to be to deliver the Nuclear Power ships and submarines on time. Today we are not doing a good job with that. Only onethird deliver on time. Kind of better on the house side with carrier side. 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 ontime delivery of ships and submarines. And the reason its the number one priority is because of the 235 shipsvy today, about onethird of them at any period in time are not in my 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. When you think about it. Part of that is because we were down to ten 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 fleet that we need. 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. One, ive got to have the capacity to do the work. That gets the people side of the house. 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 on the ship 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 shipyards to get the work done more productively than to day. Many of our shipyards, some of 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. We typically, in terms of capit capital, improvements in the yard, we make investments in equipment and replace equipment about every 20 to 25 years. The Industry Standard is 10 to 15 years less than that. I have buildings over a hundred years old that i cant get work done. Weve got to go make a concerted effort to look from an industrial standpoint how to do we set our yards up and we have to make investments in our Naval Shipyards to get 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 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 for work were going to need 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. That will also be a part of our maintenance strategy. I think when you combine those two things together and that into the build strategy that were going to have, weve got a viable path Going Forward to get to 355 and may in fact be able to get there sooner than we would otherwise get there by just building new. With that, i will conclude my remarks and take a seat here and