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Mr. Chairman and Members of the Subcommittee, I am pleased to be here today to discuss issues related to the Administration's plan for producing nuclear attack submarines.

Attack submarine programs are a significant portion of the Navy's overall acquisition plan: in its 1996 request, the Administration has allocated $2.8 billion for them. That sum includes $1,507 million to complete the funding for a third Seawolf submarine, $704 million in advanced procurement funding to support procurement of the first New Attack Submarine (NAS) in 1998, $455 million in research and development funding for the NAS, and $127 million in technology programs supporting the Seawolf program.

My testimony today presents the Congressional Budget Office's (CBO's) preliminary findings from an ongoing study of nuclear-capable shipbuilders, which we have undertaken at the request of Senator McCain. That effort is focused on evaluating the potential long-term advantages and disadvantages, as well as the near-term costs and savings, of consolidating all nuclear shipbuilding in one yard.

Two shipyards currently produce nuclear-powered vessels: General Dynamics' Electric Boat Division, which specializes in submarines, and Tenneco's Newport News Shipbuilding, which builds both submarines and aircraft carriers. The Department of Defense (DoD) has chosen Electric Boat to design and build the first NAS and plans to designate the shipyard to construct more of the ships. It has also chosen to complete a third Seawolf submarine at Electric Boat to ensure that the shipyard continues operating until production of the first NAS begins.

Newport News Shipbuilding has recently petitioned the Congress to mandate that procurement of the NAS be based on "full and open competition." It claims that such a competition would reveal it to be the lower-cost builder. In support of its claim, Newport News has provided an analysis indicating savings of almost $2 billion for the first five ships and $7 billion to $10 billion over the life of the program. The Navy, however, claims that savings would be much less--$1.3 billion through 2012. Furthermore, it asserts that opening up the NAS program for competition at this point would lead to significant delays and, were Newport News to win the competition, the likely prospect that submarine production would be reduced to a single yard.

My testimony today will focus on our preliminary findings in three areas:

• The need for the third Seawolf submarine that DoD has requested in its fiscal year 1996 budget and the budgetary savings that would result if it was not approved;
  
  
• The risks and potential for savings that would be associated with consolidating all nuclear ship construction in one yard; and
  
  
• The gains and costs from holding a competition or a series of competitions for the New Attack Submarine program.

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