How to Buy a Submarine, American Style

The Buzz

Several weeks ago the Pentagon announced that it had awarded a contract for another ten Virginia class nuclear attack submarines (SSNs). The headline price was US$17.6 billion, or about $1.76 billion per boat, and demonstrates a continuing reduction in unit cost of the Virginias as production ramps up.*

The development of the Virginia class is rightly seen as an exemplar of military procurement done smartly. Its development dates back to the mid-1990s, and followed on from the development of the Seawolf class, another exemplar of military procurement—but not of the good kind. The Seawolf grew out of Cold War requirements for an ultra-quiet but fast attack boat. Due to the noise generated by water flow around the hull and by the propulsion system, speed and quiet are generally an either/or proposition for submarines. Demanding both put the boat firmly on the path of conflict with Augustine’s Law VII: the last 10% of performance generates 1/3 of the cost and 2/3 of the problems.

A speaker at the recent ASPI submarine conference made the observation that ‘no system was too beautiful’ for the Seawolfs. In other words, pursuit of the highest level of performance was given priority above any thought of economical production. The result was inevitable; the Seawolf entered into an F-22-like ‘death spiral’ of higher projected unit costs and lower projected build numbers. In the end only three were built, versus 29 planned, as the 1991 cost estimate was close to US$5 billion per boat in today’s dollars.

So a new way of building submarines needed to be found if the US Navy (USN) was to have any chance of keeping its SSN numbers at the desired levels. Just as the USN surface fleet has been dwindling in size as unit costs rise, so too has the submarine arm. The planned 30 Virginia class (and three Seawolfs) will follow on from 62 Los Angeles class SSNs. While each new boat will be significantly more capable than the one it replaces, it can still only be in one place at a time (numbers matter) and the ‘rule of three‘ means that only a third of the fleet can be relied upon to be operational much of the time.

Nonetheless, the USN will have more Virginias than it would ever have got Seawolfs. So how did it go about designing a submarine that was capable enough for the future environment, but inexpensive enough to build in adequate numbers? The answer is described in a US Naval Institute article from a few years ago. Or, more accurately, the answers, because there was no single factor. The USN was prepared to listen to innovative ideas from the shipbuilders rather than impose requirements-driven solutions. One such was a new approach to sonar arrays that makes them easier to build and maintain but still provides acceptable performance. And weapons systems designed and built for guided missile boats were reused in the Virginias, rather than a new bespoke design.

Building political capital and Congressional trust through consistent messaging was also important, as was finding a cost-effective way to provide productivity incentives to both of the shipbuilders involved in the program. The USN agreed to fund infrastructure and facilities upgrades at the two shipyards, but with strings attached. Half of the money would be paid before the upgrades began—but only on approval of a fully-costed business plan that showed how the yard planned to improve productivity and cut overall program costs. The other half of the money would be paid after those productivity improvements had been demonstrated. Because each yard knew that the other would be making a pitch, it also introduced competition between them for funding. That was a win-win arrangement which gave the shipbuilders a government funded capital boost and the USN a lower overall program cost.

It’s only a partial victory though. As a recent Congressional Research Service report observed:

“The Navy’s FY2015 30-year SSN procurement plan, if implemented, would not be sufficient to maintain a force of 48 SSNs consistently over the long run. The Navy projects under that plan that the SSN force would fall below 48 boats starting in FY2025, reach a minimum of 41 boats in FY2028-FY2030, and remain below 48 boats through FY2034.”

So the Virginias aren’t the complete solution to the USN’s numbers problem. But it’s fair to say that the situation would be even worse without the cost reduction efforts. We’ve reached the point in weapons development where ‘better is the enemy of good enough‘ carries more weight than it used to.

Andrew Davies is senior analyst for defense capability and director of research at the Australian Strategic Policy Institute. This article was originally published by ASPI's The Strategist Blog here.

Image: U.S. Navy Flickr.

*Lest readers disposed towards an Australian Virginia class buy get too excited, that’s the shipyard contract or ‘sailaway’ cost, and lacks many of the costs associated with onboard systems and material needed to operate the boat. The USN budget papers for FY 2015 (PDF, page 45) show a unit procurement cost of various blocks between US$2.5 – $3.2 billion, or about half the projected cost of a Seawolf.

TopicsSecurity RegionsAustralia

Obama, the Senkaku/Diaoyu Islands, and the US-Japan Security Treaty

The Buzz

The main talking point of President Barack Obama's visit to Japan on April 23-24 has been his declaration that the Senkaku/Diaoyu Islands are subject to Article 5 of the Japan-US Security Treaty. Article 5 of the treaty declares the two states would act against an attack on "territories under the administration of Japan."  This is an important development in US-Japan security relations, as Obama became the first sitting US president to make this coverage explicit and perhaps even challenge the traditional US position of not taking sides in territorial disputes.

Why was Obama willing to make this bold statement? This question is important as the Sino-Japanese relationship is probably at its lowest point in recent history and the statement risks antagonizing China and destabilizing US-China relations that have been on an even keel since the Obama-Xi California Summit in June 2013.

The statement by Obama was a calculation that attempted to gain leverage in bilateral issues involving Japan and restore stability in the East China Sea by eradicating ambiguity regarding the US role in support of Japan in the event of a conflict on the East China Sea.

Obama's statement was exactly what the Japanese leadership has been wishing for since the escalation of tensions in the East China Sea that began in September 2010. For Japan, the strengthening of the US-Japan security alliance is a critical factor in dealing with tensions related to the Senkaku/Diaoyu Islands, along with expanding its defensive capabilities. Though this process started under former Prime Minister Noda Yoshihiko, efforts to strengthen the alliance saw a significant boost when Prime Minister Shinzo Abe came to power. Abe has taken bold steps to seek resolution of outstanding bilateral issues, such as the relocation of the Marine Corp. Futenma Air Base, started a national debate on revising restrictions on the exercise of the right of collective self-defence so that Japan's Self-Defense Force could assist the US in regional contingencies even when Japan's national security is not challenged, and announced Japan's participation in the Trans-Pacific Partnership (TPP) negotiations. Obama statement could be seen as a reward for these significant advancements.

At the same time, he also sought Japanese concessions on two issues. The first concerns Japan's hardened approach to the history issue. The US expressed disappointment when Abe visited Yasukuni Shrine in December 2013. This explicit expression of opposition surprised many in the Japanese leadership. Obama's clear statement regarding Article 5's application to the Senkaku/Diaoyu Islands could be a way for the US to seek a compromise with the Abe government by encouraging them to not raise tensions caused by unresolved history issues. The serious deterioration of Japan-South Korea relations due to the history issue is a serious concern for the US. As "quasi-allies," both states play critical roles alongside the US in ensuring regional stability. To encourage dialogue, Obama initiated a trilateral summit with Prime Minister Abe and President Park Geun-hye at The Hague in March 2014.

Second, the statement also aimed to extract a compromise from Japan to overcome the stalemate in the TPP negotiations. Japan and the US have not reached agreement in the negotiations. Tokyo hasn't agreed to lower tariffs to levels acceptable to the US on two products - beef and pork. According to reports, some headway was made, but no resolution was achieved by the end of Obama's trip to Japan. Significantly, the US has strengthened its leverage in the negotiation process following Obama's announcement.

This statement also contributes to stability in the region even though China has expressed opposition to it. It promotes stability by removing the ambiguity in the US position regarding what it will do in the event of a conflict in the East China Sea. To be sure, Obama's statement was a reaffirmation of statements already made by his two secretaries of State, Hillary Clinton and John Kerry, and secretaries of Defence, Leon Panetta and Chuck Hagel. Even though it does not imply a shift in US policy toward Japan, Obama's endorsement removes any ambiguity in this policy.

This statement also contributes to stability as it removed lingering doubts that were prevalent in Japan about the US commitment to Japan and Asia, and its ability to realize the rebalancing strategy toward Asia. The US preoccupation with the Middle East and seeming weakness revealed when dealing with the Syrian and Crimean crises raised questions related to the US role as a security guarantor. Obama's statement makes explicit three points critical to Japanese defense planners: it reaffirms the US commitment to Japan, underscores that Japan continues to be the primary ally of the US in the region, and sends a strong signal that the US is serious about rebalancing to Asia. This applies to other US allies as well. The bold statement about US commitment and will to fulfil its treaty obligations was a much needed message.

Bhubhindar Singh is Associate Professor and Coordinator of the Multilateralism and Regionalism Programme at the S. Rajaratnam School of International Studies, Singapore. The following piece was first published by CSIS: PACNET here.

Image: White House Flickr.

TopicsSecurity RegionsJapan

Thomas Piketty’s “Capital in the 21st Century” and the Inequality Debate

The Buzz

Thomas Piketty’s “Capital in the 21st Century” is a smash on the Amazon bestsellers list. It is all the rage in DC and other corridors of influence.

Why all the buzz? Because Dr. Piketty, economics professor at the Paris School of Economics, has amassed a novel set of data on income and wealth inequality stretching back hundreds of years using tax returns from the U.K., France, and the U.S.

Referencing such data, Piketty argues that wealth inequality grows continually in capitalist economies because the return to capital outpaces economic growth. In other words, capitalists will always do better than workers no matter how strongly the economy grows.

Given today’s political debate on inequality in the U.S., this finding was certain to gain interest here.

But Piketty’s findings are by no means definitive, and many have shown his argument doesn’t hold up if you change some of his basic assumptions.

Kevin Hassett of the American Enterprise Institute, for instance, ably explained how for Piketty’s argument to hold, the trade-off of capital for labor would have to be much higher than economic research has found.

Given the new and interesting data Piketty compiled, and the surprising theory he extrapolated from it, “Capital” should be generating similar enlightening debate on the many other complexities relating to inequality.

Instead, some are using it simplistically as irrefutable proof they were right all along.

Case in point: Paul Krugman. He claims conservatives are in a panic over the book because it “demolishes that most cherished of conservative myths, the insistence that we’re living in a meritocracy in which great wealth is earned and deserved.”

He concludes by saying conservative opposition to the book’s inferences and conclusions shows that the Right is “out of ideas.”

Wait a minute. Piketty shows who is out of ideas?

The Parisian economist’s recommended “cure” for ever-rising wealth inequality is to levy a global wealth tax and steeply progressive income tax rates. In other words, the exact policy agenda liberals, including Krugman, have been advocating for over 100 years.  

Krugman does not consider the possibility that conservatives object to Piketty’s preferred policy remedy because they believe it would have disastrous effects on poor and middle class families.

There is, after all, good reason to believe a wealth tax and a more steeply progressive income tax would suppress economic growth and shut off opportunity for families down the income scale, doing far more harm than good.

Nor does he consider that, even if you accept Piketty’s argument that the return to capital will always be greater than economic growth, there are ways other than enacting the first chapter in the Liberal Policy Playbook of dealing with rising inequality.

The most obvious alternative is to make it easier for people and families at lower income levels to accumulate capital so they, too, can enjoy its return. This of course would require making it easier to save and invest through tax reform, something in which the left has shown little interest.

The other glaring omission from the debate so far has been dreadfully slow economy of the Obama years. President Obama shifted to growing inequality as his preferred policy platform after it was clear the economy wasn’t going to return to robust growth under his stewardship.

Inequality always has more salience with the public when the size of the economic pie is stagnating and we are arguing over the size of our respective slices. It matters less to most when the pie is growing and everyone is doing better.

Figuring out how we can lift the economy out of its now 6-year-long rut should be the paramount goal of those concerned with rising inequality.

The debate over inequality isn’t going away anytime soon, since liberals have taken President Obama’s lead and chosen it as their policy battleground leading up to 2016.

When going up against a familiar opponent, it’s always comforting to know which play they’re going to call. When it comes to inequality, liberals will call the same play in 2016 they called for in 1916.

Conservatives know what’s coming. They should have a superior defense ready for deployment.

Curtis Dubay is a research fellow specializing in tax policy in The Heritage Foundation’s Roe Institute for Economic Policy Studies.

TopicsEconomics RegionsUnited States

Coming to Terms with a Troubled Past

Paul Pillar

The recent brief jailing and interrogation of Sinn Fein leader Gerry Adams in connection with the murder of a Northern Ireland woman 42 years ago was a flashback to the Troubles in Ulster—which are now far enough in the past that they are beyond the living memory of many younger observers and analysts who ordinarily pay close attention to communal conflict and strife.  This case also illustrates a more general problem not limited to Northern Ireland: how to deal with those who have participated in such strife by committing grave offenses (including, but not limited to, terrorism) against the lives and rights of others but have since moved on, along with their movements and their countries, to more peaceful and less offensive ways of doing business.

The dilemma is that simply to move beyond what is bygone leaves unsatisfied a felt need for justice to be served, but to serve it through punishment of people who have committed past offenses may undermine the very progress that has made more peaceful times possible.  It may undermine the progress by taking out of action leaders who are among the few who can commit entire communities, or by perpetuating indefinitely a cycle of reprisal and retaliation in which each side in a conflict wants to get in the last lick.  Having justice be done is important, but isn't it at least as important for those who might be punished, and the communities to which they belong, to transition to more peaceful, just and harmonious ways of pursuing their interests?

There is no good solution to the dilemma. Any formula will be a compromise that will only partially achieve each objective, and only partially satisfy almost anyone involved in a conflict.  One criterion that nearly always ought to take precedence, however, is honesty.  Regardless of how else offenses of the past are to be dealt with today, it is almost always best to uncover and acknowledge the truth about those offenses.  In the case of Adams, there has not been honesty.  He strongly denies involvement in the killing of Jean McConville; the police released him after questioning him about the case, and the rest of us do not have enough to go on to pass judgment about this murder.  But Adams' longstanding contention that he is only a political leader who never was part of the IRA and any of its violent activities has never been plausible. 

Sweeping truth about past activities under a rug is not a lasting solution.  Lies are ultimately a flimsy foundation on which to build the trust necessary for a stable and peaceful political order.  Moreover, a suppressed past is apt to bubble up unexpectedly in improbable ways and places.  Resurrection of the McConville case and the possible involvement of Adams came about through an oral history compiled several years ago by researchers at Boston College. 

A process exemplified by South Africa's Truth and Reconciliation Commission remains probably the best way to deal with the underlying dilemma.  It is a process of bearing witness to all that happened in the past, and to overcome the legacy of past offenses through acknowledgment and amnesty, not by lifting a rug and sweeping dirt there.  The South African process certainly had its critics and the shortcomings were apparent, but that is inevitable in a situation in which a less-than-perfect compromise is the very best one can hope for.  Adams has expressed support for some sort of truth and reconciliation process, which is good, but he seems to have in mind an international body with little or no involvement by the Northern Ireland parties themselves, which would be insufficient.

Insofar as the South African process was successful, an important reason was that it did not exhibit any asymmetries in its purpose or its charter.  Offenses committed by all the parties were subject to examination.  Symmetry in this respect is important so that all parties involved in a conflict can have confidence that their pain will be uncovered and their narratives will be told.  It is also important to dispel any erroneous asymmetries that the rest of us have accumulated over the years in our perceptions of the conflict—such as that only one side has terrorized the other—due to one side being better able than the other to propagandize us or to tug at our heartstrings. 

These principles can be applied to several conflicts around the world in which different peoples have contested a piece of land.  One that readily comes to mind of particular importance to the United States is the contest between Israelis and Palestinians.                                  

TopicsSinn Fein RegionsNorthern Ireland

Facts, Opinions and Hot Air

Paul Pillar

The National Climate Assessment released this week is a thorough and authoritative report that also really shouldn’t be necessary in telling us what we need to know about the underlying problem.  The problem is that human activity is changing the global climate in major and mostly undesirable ways.  The evidence has long been very apparent, and the evidence is overwhelming.  It includes mountains of data and it includes principles of physics and chemistry.  What this latest report does is to relate real, not just projected, climate change to present conditions in the United States, not just to consequences that are more distant in either time or place.


Unfortunately denial is still commonplace, and denial reflects some unfortunate tendencies that discourse in the United States not only on this issue but also other issues often exhibits.  There is a tendency not to recognize genuine questions and the difficult decisions that must be made about them, but instead to wish all this away by denying the facts.  There is a further tendency for factual beliefs to stem from policy preferences rather than the other way around.  The policy preferences involved may relate to constellations of issues that go well beyond the issue at hand.  Thus there appear to be Republican facts and Democratic facts, or conservative facts and liberal facts—even on matters of chemistry and physics, and not just on the social phenomena that would be more closely related to political ideologies.


A related tendency is to discount or discredit facts communicated to us by those whose ideologies or political affiliations we do not like.  Al Gore has been the most prominent American politician sounding alarms about climate change, and so those who never liked Al Gore’s politics are predisposed to disparage any similar messages on the subject.  Because there is an issue today of whether to build the Keystone XL pipeline, with American politicians carefully calculating how the interests at stake translate into political support or opposition for themselves, we hear this week members of Congress denigrating the just-released report as supposedly just a tactical ploy timed to affect debate on the pipeline issue.


Perhaps none of this should be surprising in a polity in which, in the not distant past, people close to the policy process claimed that they could create their own reality.  As a saying of longer vintage reminds us, however, one is entitled to one’s own opinions but not one’s own facts.  Neither can one make reality go away through force of political will.


For those of us who are not natural scientists but instead dwell in matters of national security and foreign policy, one thought is that there is no more basic aspect of national security than the habitability of the physical environment in which a nation’s citizens live.  Another thought is that avoiding further environmental deterioration involves complex problems of international relations.  The climate change experienced in the United States and documented in this week’s report reflects not only activity in the United States but also the burning of forests in Indonesia and the spewing of carbon by coal-fired power plants in China.  If effective international measures on this subject are ever to be taken, a necessary first step is to discard the denial and to recognize explicitly the facts and the painful economic and other trade-offs involved.


The most recent episode of the television series Cosmos hosted by Neil De Grasse Tyson described some really awful previous periods in Earth’s climatological history, triggered by bombardment from space or by volcanism in Siberia igniting vast amounts of coal.  The good news is that since the end of the last Ice Age and for the next several tens of thousands of years mankind is likely to have a very hospitable planet on which to live—if, that is, mankind does not mess it up through its own activity.  As Tyson put it, the dinosaurs had no way of knowing about the asteroid that did them in; what’s our excuse?                      

Image: Wikimedia Commons/Gerdsch. CC BY-SA 3.0.

TopicsScience RegionsUnited States