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United StatesGeneral Accounting Office Aj.oa VowWashington, D.C. 20548 4NI ..I.

National Security andInternational Affairs Division 0

B-247405 I ly

April 28, 1992

The Honorable Earl Hutto ' /or

Chairman, Subcommittee on Readiness WiMat Spaolal

Committee on Armed ServicesHouse of Representatives

Dear Mr. Chairman:

At your request we reviewed the Innovative Naval Reserve Concept-aprogram to use Knox class frigates for training Naval Reserve crews. Ourobjective was to determine whether the program is still justified in light oftize changes in our national security environment.

B .,acko d In March 1990, as part of efforts to reduce the size of the fleet and to meetplanned budget reductions, the Navy proposed decommissioning all 46 ofthe Knox class frigates-whose primary ocean escort mission is to protectmerchant ship convoys from submarines. Decommissioning these frigateswas considered prudent because, although they had significant service liferemaining, they would have required costly weapons modernization andupgrades if they remained in the active fleet. (The frigates lack the guns,electronics and surface-to-air missiles that the Navy considers necessaryfor moderi, anti-air and surface warfare.) The Navy estimated thatdecommissioning the entire K'nox Lass would save about $6 billion overtheir projected 10 years' of remaining service life.

In August 5 990, however, a Navy task force recommended the "InnovativeNaval Reserve Concept," whereby eight of the Knox class ffigates would beassigned to the reserves. These frigates would be used to train "nucleuscrews" fo," another 32 Knox class frigates that would be decommissionedand maintained in a slightly higher state of readiness than other ships theNavy deconunissions. The remaining six frigates would be offered for saleor lease to foreign governments. Training nucleus crews during peacetimewas seen as a hedge against the possibility of a future global war. TheSecretary ,of the Navy approved the program in November 1990.

92-12875~'The 10-year program life was projected based upon the estimated remaining service lift, of the shipsand the avadlabi'hty of trained sailors with the skills required to operate and maintahn their uniquesteam-powered propulsion systems.

Page 1 GAOINSIAD-92-114 Knox Class Frigates

3.247405

Under the Knox class frigate reserve program, the eight Naval Reservetrainer ships will be manned by full-time support crews made uppredominately of active-duty reservists. Each trainer ship will train itsfull-time support crew, a Selected Reserve augment crew (in case the shipis deployed in combat), and four additional reserve nucleus crewsassociated with four decommissioned frigates. If mobilized, the nucleuscrews would be expected to help activate their frigates and train additionalcrew members.

t

The Navy estimates that the Knox class frigate reserve program will costabout $1.4 billion over the next 10 years, saving $4.6 billion rather thanthe $6 billion if the entire class were decommissioned. The Navy alsoestimates that the program will require 488 officers and 4,184 enlistedactive and reserve personnel.

As of March 1992, the 8 trainer frigates had been designated, 12 ships hadbeen decommissioned, 20 were scheduled to be decommissioned, and theremaining 6 have been leased-3 to Greece and 3 to Taiwan. Four trainerfrigates will move to their new homeports in fiscal year 1992, the firstmoving in March 1992. Planning is underway to move the remaining fourtrainer frigates to their new homeports in fiscal year 1993.

Results in Brief When the reserve concept was proposed, it was viewed as a hedge againstthe possibility of a future global war. Much has happened in the world sincethat time. Defense officials now acknowledge that we have no globalchallengers and that there are no significant military alliances hostile to ournational interests.

The Knox class frigate program should be canceled because of the muchreduced threat of a global war. Decommissioning all of the ships nowwould save the program's projected $1.4 billion 10-year cost.

Global War Is Far Less The Knox class frigate was designed primarily for escorting convoys.Although Navy officials told us that convoys have not been used since

Likely World War II, there was still considerable doubt about the future potentialfor a global war with the Soviet Union when the reserve concept wasapproved in November 1990. At that time, 1)O1) planning focused on thepossibility that the Soviet Union might seek to quickly restore thereductions it was making in its military forces.

Page 2 GAO/NSIAD-92-114 Knox Class Frigatec

B-247405

Much has happened to the U.S. national security environment since thereserve frigate concept was approved. For example, the BPtic Republicsdeclared independence, Soviet troops have begun withdrawing from EastBloc countries, the Soviet Union has ceased to exist, and military forces inthe former Soviet Union have been cut even further. The Secretary ofDefense testified on Janumy 31, 1992, that whereas before we faced a ColdWar threat of a global war beginning with only a week or two of warning,now the democratic liberation of Eastern Europe and the dissolution of theSoviet Union means that we have no global military challenger. TheSecretary also said that we could respond in a graduated manner topreclude the reemergence of a global military threat-for example, usingeconomic and political leverage.

Last year, the Chairman of the Joint Chiefs of Staff told the Congress thatold planning assumptions about warning times were almost irrelevant andthat it would likely take months, if not several years, for the Soviets toreconstitute their military forces. This past January the Secretary ofDefense also told the Congress that if a new antagonistic superpower oralliance of hostile regional powers were to emerge in the coming years, wewould have the lead time needed to counter the new threat.

We believe the Knox class frigate reserve program .-.. no longer justiffiedbecause of the absence of a current global military threat to the UuitedStates and the prospect of far greater warning tihes if such a threat. 4Ihouldreemerge.

comnissioning The Navy estimates that the Knox class frigae reserve program will costabout $1.4 billion over the next 10 years. la addition t.o saving this amountps Now ould Save if the Navy decommissions all the Knox class friga:es now, additi, nal funds

1ut $1.4 Billion might also be saved. For example, as of March 1992, the Navy phnrried toreactivate one decommissioned frigate every other year to test thereactivation process. Reactivation costs were estimated to De $124 million;however, these costs are not included in the Navy's original pronrantestimate. In commenting on our draft report (see app. I), the Navy statedthat it is continuing to evaluate the necessity of periodic reactivations.

Page 3 GAO/NSIAD-92.114 Knox Class Frigates

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Recommendation We recommend that the Secretary of Defense cancel the reserve frigatetrainer program and direct the Secretary of the Navy to decommission theeight frigate trainers.

Agency Comments DOD did not agree that the Navy's reserve frigate trainer program should becanceled. DOD stated that the program clearly supports the reconstitutionelement of the new regional defense strategy and that it provides acost-effective means to rebuild force structure in response to potentialfuture global threats.

We acknowledge that the Navy's reserve frigate trainer program couldprovide an ability to field additional forces. However, DOD was not able toprovide an analysis for the need to be able to more quickly reconstitute theKnox class frigates than would be possible without the training program.

We continue to believe that the threat of a global war has becomesignificantly more remote since this program was first approved. Unlessthe program can be specifically justified, we do not support spending $1.4billion over its projected 10-year life. Therefore, we continue to believe thatthe reserve frigate program should be canceled.

Scope and To accomplish our objectives, we reviewed Navy documents, studies, and

publications. We analyzed the Navy's Innovative Naval Reserve Concept

Methodology Implementation Plan and relevant budget and staffing data. We helddiscussions with officials from the Office of the Director of the NavalReserve and the Deputy Chiefs of Naval Operations for Surface Warfare,Logistics, Air Warfare, and Plans, Policies and Operations in Washington,D.C. We also visited Atlantic Fleet Headquarters and the Navy ManpowerAnalysis Center, both of which are located in Norfolk, Virginia.

We conducted our review from June 1991 through February 1992 inaccordance with generally accepted government auditing standards.

As agreed with your office, unless you publicly announce the report'scontents earlier, we plan no further distribution until 30 days from the dateof the report. At that time, we will send copies to the Chairmen andRanking Minority Members, Senate and House Committees n ArmedServices and on Appropriations; the Secretaries of Defense and the Navy;

Page 4 GAO/NSIAD-92.114 Knox Class Frigates

B-247405

and the Commandant of the Marine Corps. We will also make copiesavailable to other other interested parties on request.

Please contact me on (202) 275-6504 if you or your staff have anyquestions. Major contributors to this report wee Norman Rabkin,Associate Director; Robert Eurich, Assistant Director; Joseph F. Brown,Evaluator-in-Charge; aid Martin E. Scire, Evaluator.

Sincerely yours,

Martin M FerberDirector, Navy Issues

Page 5 GAO/NSIAD.92-114 Knox Class Frigates

Comments From the Department ofDefense

Note: GAO commentssupplementing those in thereport text appear at theend of this appendix. ASSISTANT SECRETARY OF DEFENSE

WASHINGTON. D.C. Z0301

MMR 2 4 19902NKSZRVK AFVrAIRS

Mr. Frank C. ConahanAssistant Comptroller GeneralNational Security and International Affairs DivisionUnited States General Accounting OfficeWashington, DC 20548

Dear Mr. Conahan:

This is the Department of Defense (DoD) response to theGeneral Accounting Office (GAO) draft report entitled--"NAVALRESERVES: All Knox Class Frigates Should Be Decommissioned"(GAO Code 394441/OSD Case 8749-A), dated February 20, 1992. TheDepartment does not concur with the GAO findings or therecommendation.

The Navy Reserve frigate trainer program clearly supportsthe reconstitution element of the new regional defense strategy.Reconstitution is intended to deter any potential adversary fromattempting to build forces capable of posing a global challengeto the U.S., and, if deterrence fails, to provide a globalwarfighting capability. The program is a cost effective means ofassuring a responsive ability both to train officers and crews--aprocess that takes years to accomplish--and to provide shipswhich would otherwise have to be constructed, again a processmeasured in years, not in months.

The detailed DOD comments on the GAO findings andrecommendation are provided in the enclosure. The Departmentappreciates the opportunity to review and comment on this draftreport.

Sincerel

Stephen M. Duncan

P'age 6 GAO/NSIAI).92.114 Knox Class Frigates

Comments From the Department of Defense

GAO DRAFT REPORT -- DATED JANUARY 18, 1992

(GAO CODE 394441) OSD CASE 8749

"NAVAL RESERVES: ALL KNOX CLASS FRIGATES SHOULD BEDECOMMISSIONED"

DEPARTMENT OF DEFENSE COMMENTS

* *** *

FINDINGS

O FINDING A: EDg&N_ lass Fr.gate. The GAO reported thatin March 1990, as part of efforts to reduce the size ofthe fleet and to meet planned budget reductions, the Navyproposed decommissioning all 46 of the Knox classfrigates. The GAO found that decommissioning thesefrigates was considered prudent because they would haverequired costly weapons modernization and upgrades ifthey remained in the active fleet. The GAO noted thatthe Navy estimated that decommissioning the entire Knoxclass would save about $6 billion over their projected10-years of remaining service life. The GAO found,however, that in August 1990 a Navy task forcerecommended, and the Secretary of the Navy subsequentlyapproved, the "Innovative Naval Reserve Concept" wherebyeight of the Knox class frigates would be assigned to theReserves. The GAO also reported that these frigateswould be used to train "nucleus crews" for another 32frigates. The GAO also noted that the remaining sixfrigates would be offered for sale or lease to foreigngovernments. The GAO pointed out that training nucleuscrews during peacetime was seen as a hedge against thepossibility of a future global war. The GAO found thatunder the Knox class frigate reserve program, the eightNaval Reserve trainer ships will be manned by full-timesupport crews made up predominantly of active-dutyReservists. In addition, the GAO reported that the Navyestimates that the Knox class frigate Reserve programwill cost about $1.5 billion, and will require 488officers and 4,184 enlisted Active and Reserve personnel.Finally, the GAO reported that, as of January 1992, theeight trainer frigates had been designated, 12 ships hadbeen decommissioned, and 20 were scheduled to be decom-missioned. The GAO found that four trainer frigates w1].1move to their new homeports in FY 1992, and the remainingfour in FY 1993. (pp. 1-2/GAO Draft Report)

DOD R _ZyONSE: Partially Concur. The Navy has determinedSee GAO comment 1. that Knox class frigates would require significant

Page 7 GAO/NSIAD.92.114 Knox Class Frlgat(

Comments From the Department of Defense

weapons modernization only if they were required to meeta full range of missions against a reemergent globalthreat. As currently configured, however, the Knox classfrigates would be valuable as Protection of Shippingcombatants to be used in escorting convoys and/orconducting anti-submarine warfare.

Six of the frigates have been offered and accepted forlease--three to Taiwan and three to Greece.

Tke Navy's 10-year programmed cost for the program is$1.4 billion, somewhat less than the cost of $1.5 billioncited by the GAO.

o FINDING : Global War is Far Less Likely. The GAOreported that the Knox class frigate was designedprimarily for escorting convoys. The GAO noted that Navyofficials stated that there was still considerable doubtabout the future potential for a global war with theSoviet Union when the Reserve concept was approved inNovember 1990. The GAO also noted that, at the time, theDoD planning focused on the possibility that the SovietUnion might seek to quickly restore the reductions it wasmaking in its military forces.

The GAO observed that much has happened to the U.S.national security environment since the Reserve frigateconcept was approved. The GAO noted that the Secretaryof Defense testif.ed on January 31, 1992, that whereasbefore the U.S. faced a Cold War threat of a global warbeginning with only a week or two of warning, now thedemocratic liberation of Eastern Europe and thedissolution of the Soviet Union means that the U.S. hasno global military challenger. The GAO noted that theSecretary of Defense also said that the U.S. couldrespond in a graduated manner to preclude the reemergenceof a global military threat--for example, using economicand political leverage.

The GAO also reported that the Chairman of the JointChiefs of Staff told the Congress last year that oldplanning assumptions about warning times were almostirrelevant, and that it would likely take months, if notyears, for the Soviets to reconstitute their militaryforces. The GAO also noted that the Secretary of Defensealso told the Congress this past January that if a newantagonistic superpower or alliance of hostile regionalpowers were to emerge in the coming years, the U.S. wouldhave the lead time needed to counter the new threat. TheGAO concluded that the Knox class frigate reserve programis no longer justified because of the absence of acurrent global military threat to the United States and

Page 8 GAO/NSIAD-92-114 Knox Class Frigates

Comments From the Department of Defense

the prospect of far greater warning times if such athreat should reemerge. (pp. 3-4/GAO Draft Report)

DOD RESPONSE: Nonconcur. While Knox class frigates dohave convoy escort as one of their missions, additionalprimary and secondary missions assigned are anti-submarine warfare, anti-surface warfare, anti-airwarfare, naval gunfire support, escort of underwayreplenishment groups, support of amphibious operations,maritime intercept operations, counternarcoticoperations, and electronic warfare. Since first built,these ships have been modernized to enhance their mission

See GAO comment 2. capability. The combat systems of all Knox classfrigates have been upgraded to include the Harpoon anti-ship cruise missile, and they have been continuallyupgraded in their anti-submarine warfare capability,making them capable of effectively detecting, tracking,and engaging the majority of Commonwealth of IndependentStates and Third World submarines.

The Navy's Reserve frigate trainer program is designed toprovide capability for reconstitution of forces to deter,or if necessary respond to potential future globalthreats. The eight ships maintained in the commissionedKnox class Reserve fleet provide a means of trainingcrews essential to man a reconstituted force. In theabsence of this program, training of the complements ofthe reconstituted ships would require a prohibitivelylong period. The 32 additional ships in the frigatetrainer program will be maintained in condition to berecommissioned within six months. Clearly, without theprogram, reconstitution of similar capabilities wouldtake years. The Reserve frigate trainer program is arelatively low cost option to provide insurance againstpossible future global threats.

o FINDING C: Decommissioning Ships Now Could Save About$1.5 Bilion. The GAO reported that--in addition tosaving the $1.5 billion the Navy estimates the programwill cost over the next 10 years--if the Ncvy decommis-sions all the Knox class frigates now, additional fundswould be saved. The GAO found, for example, that theNavy did not include the following items in its $1.5billion program cost estimate:

- Increased topside maintenance for the 32decommissioned frigates ($16 million total).

- Periodic reactivation costs. (Navy officialsreportedly stated they plan to reactivate one shipevery other year to test the reactivation process($124 million total).)

Page 9 GAO/NSIAD.92-114 Knox Class Frigates

Comments From the Department of Defense

Equipment necessary to support and maintain thefrigates at the three new homeports.

The GAO concluded that decommissioning, selling, orleasing all of the ships now would save most of theprogram's $1.5 billion cost. (pp. 4-5/GAO Draft Report)

DOD RESPONSE: Nonconcur. All topside maintenance costswere included in the original estimates. Sinceestablishment of the Reserve frigate trainer program, theNavy has determined that condition-based rather thantime-based topside maintenance is more appropriate. As a

See GAO comment 3. result, those ships maintained in more temperate climateswill require less frequent topside painting. This newmaintenance policy, when adopted, is expected to pxoduceprogram savings above those already identified.

Periodic reactivation is currently scheduled. However,the Navy continues to evaluate its necessity.

The cost of the operational staff in Mobile, Alabama,will be absorbed within existing resources.

Equipment at the three homeports is a "sunk" cost notspecifically related to the Reserve training frigateprogram. Port operating costs accrue regardless of whatships are homeported there, and cancellation of ,heReserve training frigate program would not in and ofitself result in closure of any homeports. The onlyspecific expense related to the frigate program is anestimated $1 million to run a steam line to the pier inMobile, Alabama, that was included in the program costestimate.

RECOMMENDATION

0 RECOMMENDATXON: The GAO recommended that the Secretaryof Defense cancel the Reserve frigate trainer program anddirect the Secretary of the Navy either to decommis-sion, sell, or lease the Vnox class frigates. (p. 5/GAODraft Report)

PD RESPNZE: Nonconcur. The Department's view, asreflected in the FY93 President's Budget, is that theNavy's Reserve frigate trainer program is a cost

See GAO comment 4. effective means of providing reconstitution capabilities

Page 10 GAOINSIAD-92-114 Knox Class Frigates

Comments From the Department of Defense

to deter, or if necessary to respond to, potential futureglobal threats requiring capabilities beyond thosemaintained in the active Navy. Because of the long leadtime required to build new surface combatants and traintheir crews, even the most optimistic warning times are

See GAO comment 5. insufficient for such reconstitution activities.

In addition to its value as a reconstitution asset, theNavy's Reserve frigate trainer program also serves as anexpanded shipboard training opportunity for SelectedReservists throughout CONUS and is an excellent vehicle

See GAO comment 6. for the Navy's women-at-sea program.

Page 11 GAO/NSIAD-92-114 Knox Class Frigates

Comments From the Department of Defense

The following are GAO's comments on DOD's letter dated March 24, 1992.

GAO Comments 1. We did not question whether the Knox frigates could be used to protectshipping assets in a global war. Our position is that there will be sufficienttime to reactivate them in the event of global war and, therefore, there is noneed to maintain the $1.4 billion frigate trainer program. We have revisedthe report to reflect the lease of the six frigates-three to Taiwan and threeto Greece. Also, the report has been revised to reflect DOD's latest costestimate of the program.

2. The frigates may be able to effectively detect, track, and engage themajority of Commonwealth of Independent States and Third Worldsubmarines. However, DOD views the frigate trainer program as a hedgeagainst the possibility of a future global war and states that the ships andcrews need to be able to be recommissioned within 6 months. But DOD

officials have also testified that there would likely be several years' warningtime of a possible global war.

3. Our draft report identified several additional costs that would beincurred if the program is continued. Based on DOD's responc, our finalreport only includes estimates for periodic :eactivations.

4. The Navy has not identified how long it would take to recommissionships without a training program. Also, there is no specific requirement tobe able to reactivate the frigates within 6 months. Our recommendation inthe final report was modified to reflect that we believe the Navy shoulddecommission the remaining Knox class frigates.

5. Our draft report did not state or suggest that DOD should build newsurface combatants. Rather, our report clearly states that the potentialthreat of a future global war is far less likely than when the frigate trainingprogram was first approved. We believe that increased warning times willallow sufficient time to reactivate crews for the Knox frigates if they wereall decommissioned.

6. While the program may provide additional benefits as stated by DOD, webelieve these benefits do not justify the program's continuation.

(394441) Page 12 GAO/NSIAD-92-114 Knox Class Frigates