DEPARTMENT OF THE NAVY FISCAL YEAR (FY) 2005 BUDGET ESTIMATES JUSTIFICATION OF ESTIMATES FEBRUARY 2004 WEAPONS PROCUREMENT, NAVY

Transcription

1 H I () 2005 I III I 2004 W,

2 II epartment of the avy 2005 rocurement rogram xhibit -1 : ebruary 2004 ($ I II) ppropriation: Weapons rocurement, avy II allistic issiles ther issiles 1, , orpedoes and elated quipment ther Weapons pares and epair arts , , ,101.5 * I $50,000 II - 1

3 II epartment of the avy 2005 rocurement rogram xhibit -1 II: 1507 Weapons rocurement, avy : ebruary , $ I II () I I I I QI QI QI II 01: allistic issiles allistic issiles rident II 22,752, ess: dvance rocurement () odification f issiles I II ods upport quipment nd acilities issile Industrial acilities allistic issiles * I $50,000 II - 2

4 II epartment of the avy 2005 rocurement rogram xhibit -1 II: 1507 Weapons rocurement, avy : ebruary , $ I II () I I I I QI QI QI II 02: ther issiles trategic issiles omahawk 874, ,131, actical issiles , idewinder 224, W 358, tandard issile 2,001, , erial argets rones and ecoys ther issile upport odification f issiles idewinder ods H ods tandard issiles ods upport quipment nd acilities Weapons Industrial acilities rdnance upport quipment rdnance upport quipment * I $50,000 II - 3

5 II epartment of the avy 2005 rocurement rogram xhibit -1 II: 1507 Weapons rocurement, avy : ebruary , $ I II () I I I I QI QI QI ther issiles 1, , * I $50,000 II - 4

6 II epartment of the avy 2005 rocurement rogram xhibit -1 II: 1507 Weapons rocurement, avy : ebruary , $ I II () I I I I QI QI QI II 03: orpedoes and elated quipment orpedoes nd elated quipment W argets od f orpedoes nd elated quip K-46 orpedo ods K-48 orpedo ods Quickstrike ine upport quipment orpedo upport quipment W ange upport estination ransportation irst estination ransportation orpedoes and elated quipment * I $50,000 II - 5

7 II epartment of the avy 2005 rocurement rogram xhibit -1 II: 1507 Weapons rocurement, avy : ebruary , $ I II () I I I I QI QI QI II 04: ther Weapons uns nd un ounts mall rms and Weapons W irborne ine eutralization ystems odification f uns nd un ounts IW ods /54 un ount ods un ount ods ther ioneer ruiser odernization Weapons ancelled ccount djustments ther Weapons * I $50,000 II - 6

8 II epartment of the avy 2005 rocurement rogram xhibit -1 II: 1507 Weapons rocurement, avy : ebruary , $ I II () I I I I QI QI QI II 06: pares and epair arts pares and epair arts pares and epair arts pares and epair arts * I $50,000 II - 7

9 II epartment of the avy 2005 rocurement rogram xhibit -1 II: 1507 Weapons rocurement, avy : ebruary , $ I II () I I I I QI QI QI Weapons rocurement, avy 2, , ,101.5 * I $50,000 II - 8

10 iscal ear 2005 udget stimates udget ppendix xtract anguage W, (W) or construction, procurement, production, modification, and modernization of missiles, torpedoes, other weapons, and related support equipment including spare parts, and accessories therefor; expansion of public and private plants, including the land necessary therefor, and such lands and interests therein, may be acquired, and construction prosecuted thereon prior to approval of title; and procurement and installation of equipment, appliances, and machine tools in public and private plants; reserve plant and overnment and contractor-owned equipment layaway, [$2,095,784,000] $2,101,529,000, to remain available for obligation until eptember 30, [2006] ( , 5062; epartment of efense ppropriations ct, 2004.)

11 II I III H ebruary 2004 II/ II -1 I W, / II 1 II II I II II -133 (-5) $ in illions rior ears o omplete otal rogram QI nd ost $14,663.7 $285.5 $289.7 $122.9 $0.0 $0.0 $0.0 $0.0 $479.1 $15,840.9 ess: rior ear dv. roc. ($1,680.8) ($127.3) ($153.3) ($49.8) $0.0 $0.0 $0.0 $0.0 ($479.1) ($2,490.3) ull unding I II $12,982.9 $158.2 $136.4 $73.1 $0.0 $0.0 $0.0 $0.0 $0.0 $13,350.6 lus: urrent ear dv. roc. $2,490.3 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $2,490.3 lus: Initial pares $35.4 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $35.4 otal ew bligational uthority $15,508.6 $158.2 $136.4 $73.1 $0.0 $0.0 $0.0 $0.0 $0.0 $15,876.3 issile lyaway nit ost $15.4 $23.8 $24.2 $24.6 $0.0 $0.0 $0.0 $0.0 $0.0 $16.0 : -1 data for I II nd ost and dvance rocurement in 2003 through 2005 are incorrect, but were not discovered until after -1 printing. he correct information is provided above. -1 ull unding data are correct and match the data above. he I II missile is carried on HI leet allistic issile ubmarines, ensuring that the nited tates continues to maintain a highly survivable strategic deterrent well into the 21st century. eployment of the I II missile (1) enhances leet allistic issile ubmarine survivability by increasing ea aunched allistic issile range at full payload to exploit the total patrol area available to the I submarine, (2) minimizes total weapon system costs by increasing ea aunched allistic issile payload to the level permitted by the size of the I submarine launch tube, thereby allowing mission capability to be achieved with fewer submarines, and (3) balances the riad by adding efficient hard target kill capability to the ea aunched allistic issile. unding in this line is required to support the procurement of I II missiles, initial production of which commenced in 1987 and supported a I II missile Initial perational apability (I) in arch eginning in 2001, funds were included for -5 life extension to ensure that trategic Weapons ystem life matches the extended hio-class hull life. In 2003 ongress transferred the funding for -5 life extension and missile support costs to a separate -1 line item (I II odifications). he 2004 request includes $136.4 million to complete production of authorized missiles for a 14 I II program, which assumes the backfit of four -4 boats to the -5 configuration. he 2005 request includes $73.1 million to complete production of authorized missiles. he avy requests the addition of specific language in the 2005 o ppropriations ill as follows: "he Weapons rocurement, avy appropriation includes $8.854 million of cash payments to be deposited in the K rust und under the terms of the 28 uly 1998 ecretary of efense emorandum of nderstanding () with the nited Kingdom." he financial addendum to the specifies annual payments totaling $50.3 million for subject to ongressional authorization and appropriation. hese funds purchase -5 missile components required for the.. program and are included within the full funding request for airframe and motor flyaway costs. 2454, 88-1 HI I XHII -40 I III H I 1 1 II

12 II W I. W, KH I II. ebruary 2004 XHII (-5) II 1 I II (-5) II (31)., W Ident ode nit cost Qty nit cost Qty nit cost Qty nit cost Qty II 1/ 1/ 1/ 1 I & W 23, ,586 24, ,678 24, ,862 2 I W II I W 285, , ,862 : I (127,337) (153,268) (49,795) 4 II I 158, ,410 73,067 W II HI () 1/ Includes payments for 2003 through 2005 of $17,067, $9776 and $8854 to the K rust und. I II III. 5 WH 6 I II 7 I I & QI 8 9 I 10 II & I 11 W I 12 II 13 I 14 W I 15 II I 16 I. 5 I XI 17 II HW 18 I 19 I III I 158, ,410 73,067 : W II HI 158, ,410 73,067-1 hopping ist age o. Item o. 1 2 II

13 II : HI I XHII (-5) ebruary W -1 I : II 1 I II II -133 (-5) I, / H W I QI I I WH I I & I W Q' I 1. I II KH I /I I 01/03 10/ ,799 II. (), () 2004 /I 01/04 10/ , /I 10/04 10/ ,572. K -1 hopping ist age o. Item o. 1 3 II

14 II -1 I : 01 I H I II II (-5) : ebruary 2004 I 2005 I I/ I Q 1 1 I II II I I I K ' H I II I I XI + I I 1 1 I 1 KH I II, III , , 87-1 HI I I.. XHII -21 I H 1 4 II

15 II -1 I : 01 I H I II II (-5) : ebruary 2004 I 2007 I 2007 I I/ I II II K , 87-1 HI I I.. XHII -21 I H 1 5 II

16 II I III H ebruary 2004 II/ II -1 I W, / II 1 II II I II III $ in illions rior ears o omplete otal rogram QI nd ost $0.0 $414.8 $509.0 $695.6 $926.6 $926.7 $1,045.0 $1,135.6 $5,888.1 $11,541.4 ess: rior ear dv. roc. $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 ull unding I II $0.0 $414.8 $509.0 $695.6 $926.6 $926.7 $1,045.0 $1,135.6 $5,888.1 $11,541.4 lus: urrent ear dv. roc. $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 lus: Initial pares $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 otal ew bligational uthority $0.0 $414.8 $509.0 $695.6 $926.6 $926.7 $1,045.0 $1,135.6 $5,888.1 $11,541.4 issile lyaway nit ost $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $32.5 $28.5 $27.7 $28.4 he I II missile is carried on HI leet allistic issile ubmarines, ensuring that the nited tates continues to maintain a highly survivable strategic deterrent well into the 21st century. eployment of the I II missile (1) enhances leet allistic issile ubmarine survivability by increasing ea aunched allistic issile range at full payload to exploit the total patrol area available to the I submarine, (2) minimizes total weapon system costs by increasing ea aunched allistic issile payload to the level permitted by the size of the I submarine launch tube, thereby allowing mission capability to be achieved with fewer submarines, and (3) balances the riad by adding efficient hard target kill capability to the ea aunched allistic issile. unding in this line is required to support the procurement of I II missiles, initial production of which commenced in 1987 and supported a I II missile Initial perational apability (I) in arch rior to 2003, funds for the -5 missile production and associated support efforts were in another -1 line item. In 2003 ongress transferred the funding for -5 life extension and associated support costs to this -1 line item. he 2004 request of $509.0 million includes $279.6 million for -5 life extension to sustain production of -5 missile motors and other critical components, and $229.4 million for program and production support costs, including flight test instrumentation, additional reentry systems hardware, continued support required to maintain W's I II missile processing capability, and equipment procurements associated with establishing full I II capability at the trategic Weapons acility, acific (W) at angor, W. he -5 life extension funding request procures -5 missile motors and other critical components required to support the extended 45-year hull life (for a 14 I II program, which assumes the backfit of four -4 boats to the -5 configuration) and sustains the redesign of the guidance system and missile electronics, which must be replaced to support the extended service life. he 2005 request of $695.6 million includes $431.4 million for -5 life extension to sustain production of -5 missile motors and other critical components, and $264.2 million for program and production support costs, including flight test instrumentation, additional reentry systems hardware, continued support required to maintain W's I II missile processing capability, and equipment procurements associated with establishing a I II capability at the trategic Weapons acility, acific (W) at angor, W. he -5 life extension funding request procures -5 missile motors and other critical components required to support the extended 45-year hull life (for a 14 I II program, which assumes the backfit of four -4 boats to the -5 configuration) and sustains the redesign of the guidance system and missile electronics, which must be replaced to support the extended service life. 2454, 88-1 HI I XHII -40 I III H I 2 1 II

17 II W I. W, KH I II. ebruary 2004 XHII (-5) II 1 I II III (31)., W Ident ode nit cost Qty nit cost Qty nit cost Qty nit cost Qty II 1 I & W 2 I W 3 II I W : I 4 II I W II HI () I II III. 178, , ,155 5 WH 19,300 56,900 73,500 6 I II 60,350 49,200 57,600 7 I I & QI 19,300 21,500 21, , I II & I 13,700 13,700 14, W I 12,550 12,600 31, II 6,300 24,000 27, I 6,700 6,800 7, W I 17,440 21,220 13, II I 7,800 6, I 12,750 16,700 17, I XI 236, , , II HW 171, , , I 55,300 93, , I 9,763 1,700 4,900 III 414, , ,555 I 414, , ,555 : W II HI 414, , ,555-1 hopping ist age o. Item o. 2 2 II

18 II I III H ebruary 2004 II/ II -1 I W, / II 1 II II II II III rior ears o omplete otal rogram QI / / / / / / / / / / ost (in millions) / $1.3 $1.3 $1.3 $1.4 $1.4 $1.4 $1.4 / / Initial pares / / / / / / / / / / otal (in illions) / $1.3 $1.3 $1.3 $1.4 $1.4 $1.4 $1.4 / / nit ost (in illions) / / / / / / / / / / unding for issile Industrial acilities provides for capital maintenance projects at avy-owned aval Industrial eserve rdnance lants (I) at unnyvale and anta ruz, alifornia, and acchus, tah, in support of the leet allistic issile program. rojects planned in 2005 include additions and modifications to, and rehabilitation of, civil works, non-severable equipment, and real property. mong those projects are upgrades and improvements such as upgrading building electrical systems, replacing conductive floors, replacing insulation, replacing water and steam piping, paving roads and parking areas and painting buildings. 2454, 88-1 HI I I XHII -40 I III H 3 1 II

19 II W I. W,. II II III (31). KH I II ebruary 2004 XHII (-5) II 1., W Ident ode nit cost Qty nit cost Qty nit cost Qty nit cost Qty I I 1,293 1,295 1,334 II II III 1,293 1,295 1,334-1 hopping ist age o. Item o. 3 2 II

20 III: II II/ II Weapons rocurement, avy I III H : -40 ebruary I omahawk () rogram lement for ode Items: ther elated rogram lements 2/ther issiles.. # rior I o otal ears ode omplete rogram QI 4, ,981 ross -1 ost ($) $8, $ $ $ $ $ $ $ $0.000 $10, Q redit -$ $ $ $ $ et -1 ost ($) $8, $ $ $ $ $ $ $ $0.000 $10, dv roc/q ($) $ $ Wpn ys ost ($) $8, $ $ $ $ $ $ $ $0.000 $10, Initial pares ($) $ $ roc ost ($) $8, $ $ $ $ $ $ $ $0.000 $10, nit ost ($) $1.970 $1.249 $1.008 $0.874 $0.827 $0.869 $0.907 $1.007 $0.000 $1.570 escription: omahawk provides an attack capability against targets on land (omahawk and ttack issile ()), and can be launched from both surface ships () and submarines (). omahawk consists of the following variants: (1) -109, and ttack uclear; (2) /-109, ntiship; (3) /-109, and ttack onventional; (4) /-109, and ttack ubmunition ispenser; (5) /-109, actical omahawk. he and ttack nti-ship urface aunch uclear versions are no longer in leet use. he land-attack version in the leet is used for precision destruction of targets at long range. roduction of the actical omahawk missile began with ow ate Initial roduction (I) buys of 25 in 2002 and 350 in ull rate production commences in unit cost based on approval of multi-year procurement (). he contractor's production offer of $569 (99$) level unit price, plus overnment incentives and award fees are factored into the multi-year pricing. he 04 uthorization and ppropriations ct authorized the avy to pursue a contract. If is not approved, additional funds will be required to maintain procurement quantity Q supports economic order quantity procurements for the. haracteristics and dimensions (approximate) Weight (with booster and capsule) (-109): 4,300 pounds Weight (with booster and canister) (-109): 4,000 pounds ength (with booster): 20.5 feet Wing pan: 8.6 feet ruise peed: High ubsonic ontractor: aytheon issiles ystems ompany 2003 Iraq reedom und (I) - $193 million, replaces 183 missiles expended in I efense mergency esponse und () - $350 million, 454 missiles remanufactured to the lock III configuration. -1 HI I III: orm 2454, 86 I : 4 : 1 II

21 III: II W, 2005 H II I XHII -5 (ollars in housands) issile omenclature & opular ame: HWK (2)((W)) (I: ) () ate: ebruary 2004 rior ears 2003 Quantity 2004 Quantity 2005 Quantity ost lements otal ost Quantity nit ost otal ost Quantity nit ost otal ost Quantity nit ost otal ost issile Hardware revious omahawk roduction 5,611,035 actical omahawk 35, , , , ,113 emanufacture (lock III) 592,217 ubtotal Hardware 6,238, , , ,113 on-ecurrring ooling 24,500 13,590 ther Hardware* ubmarine apsules , , ,306 anisters , , ,628 ubtotal ther Hardware 1, , , ,934 roduction upport roduct Improvement 378,947 ystems ngineering 283,203 3,841 10,682 10,849 roduction ngineering 608,057 3,694 10,272 10,432 ubtotal roduction upport 1,270,207 7,535 20,954 21,281 otal lyaway ost 7,535, , , ,328 ther upport osts heater ission lanning enter 255,044 upport quipment 114, ,624 1,649 raining quipment 79, ,292 2,328 ocumentation 28, ubtotal ther upport osts 477,786 1,717 4,776 4,850 otal upport osts 477,786 1,717 4,776 4,850 ross -1 8,012, , , ,178 Q redit -8,982 et -1 8,012, , , ,196 Q 50,000 Weapon ystems ost 8,012, , , ,196 Initial pares 313,518 otal rogram ost 8,326,369 1, ,054 1, , ,196 on dd: 2002 omahawk emanufacture 350,000 *he unit cost for anisters and apsules is derived from the most economical combination of used (refurbished), upgraded, and new anisters and apsules. -1 HI I I III: II

22 III: II HI I XHII (-5) Weapon ystem. HWK ebruary II/ II. -1 I H Weapons rocurement, avy omahawk ((W)) (I: ) () 2 2/ther issiles / QI I I I H W I I II I & I I W I (000) ll-p-ound 01000/ ,412 I un 01 /I aytheon issile ct 02 ay 04 / ystems o., ucson, Z 01000/ '250 I un 01 /I aytheon issile an 03 ct 04 / 01000/ I ov 03 / aytheon issile an 04 ep 05 / ystems o., ucson, Z 01000/04* I ul 03 / () aytheon issile un 04 an 06 / 01000/04 for Q I ul 03 / ystems o., ucson, Z aytheon issile ystems o, ucson, Z un 04 / 01000/05* I ul 03 / () aytheon issile un 04 ov 06 / ystems o., ucson, Z I ec 01 / aytheon issile ec 01 ug 03 / ystems o., ucson, Z. K emarks: *Quantity based upon actical omahawk ulti-year rocurement in orm , 87-1 HI I I III: II

23 III: II 2004/2005 H I H, -21 ebruary 2004 II/ II -1 I Weapons rocurement, avy omahawk ((W))(I: ) () roduction ate rocurement eadtimes anufacturer's rior fter Initial eorder nit of Item ame and ocation X to ct 1 ct 1 fg fg otal easure actical omahawk (04) aytheon issiles ystems o. ucson, Z / ach I / Q lock I omahawk () lock I omahawk () *02-emanufacture of xisting issiles into lock III onfig I 2004 I 2005 I / Q lock I omahawk () lock I omahawk () lock I omahawk () *02-emanufacture of xisting issiles into lock III onfig lock I omahawk () lock I omahawk () orm 2445, 87 revious editions are obsolete -1 HI I I. 4 4 xhibit -21 roduction chedule 311 / 244 II 24 I Weapon ystem HWK 2001 I emarks: *on dd: 2002 efense mergency esponse unding (). contract incentivizes early delivery. ctual deliveries to date are annotated along with the remaining contracted delivery schedule.

24 III: II 2004/2005 H I H, -21 ebruary 2004 II/ II -1 I Weapons rocurement, avy omahawk ((W))(I: ) () roduction ate rocurement eadtimes anufacturer's rior fter Initial eorder nit of Item ame and ocation X to ct 1 ct 1 fg fg otal easure actical omahawk (04) aytheon issiles ystems o. ucson, Z / ach I / Q lock I omahawk () lock I omahawk () lock I omahawk () I / Q orm 2445, 87 revious editions are obsolete -1 HI I I. 4 5 xhibit -21 roduction chedule 311 / 244 II Weapon ystem HWK 2007 I 2006 I I 2009 I emarks:

25 xhibit -1, ultiyear rocurement riteria rogram: actical omahawk 1. ultiyear rocurement escription: his proposed multiyear procurement () covers the purchase of 1981 lock I actical omahawk missiles in 2004 through 2008 under a single five-year fixed-price contract. hese missiles constitute the first five years of ull ate roduction () of actical omahawk, following two years of ow ate Initial roduction (I) in 2002 and 2003, during which 192 actical omahawk missiles will be produced. n additional I has been funded via the 2003 upplemental ppropriations, and will procure an estimated 183 missiles prior to the beginning of the in his strategy has been structured to achieve significant savings while providing increased operational responsiveness, flexibility and reliability. he up front investment costs for non-recurring start-up expenses were funded in 2002 and 2003 as part of the I effort to support planned in dvanced procurement in the amount of $50 is provided as part of the 2004 budget to cover economic order quantities. s compared to annualized procurements, this multiyear procurement will achieve $133 of savings over the five-year period. his is equivalent to 9.0% of the total annualized cost to procure the same quantity. he contract will set a target quantity for each fiscal year of the contract, but allow for a quantity range of missiles in each fiscal year to allow the overnment the flexibility to meet emergent requirements for more missiles, including those for foreign military sales customers, while maintaining the and the savings established in the baseline. his flexibility can also accommodate a range of missile deletions without forgoing benefits, but deletions may erode some of the overall savings due to a reduction in economies of scale and the amortization of non-recurring efforts, which will have already occurred. 2. enefits to the overnment: a. ubstantial avings: Implementation of this will yield significant opportunity for cost avoidance through the five-year term of this contract. he total cost savings/avoidance for 2004 through 2008 associated with this contract are estimated to be $133 ($). he cost savings will be generated as a result of conomic rder Quantity (Q) and investment in program specific capital equipment and/or processes that would not meet the contractor s Internal ate of eturn objectives under annualized procurements. ome examples include: Williams International will level-load procurement of cruise missile engine components, such as the start cartridges and pyro igniters, which will allow for the development of a sustainable, efficient production flow process, including the optimization of component acceptance testing, at all tiers of the engine supply chain.

26 xhibit -1, ultiyear rocurement riteria rogram: actical omahawk conomic rder Quantity purchases of rocket motor sub-components such as the arm fire device, nozzle throat components, motor casing forgings and the atellite ata ink ransceiver iastat. dministrative costs will be reduced due to there being one proposal, negotiation and contract award process instead of five consecutive single-year contracting actions. ost reductions will also be realized since the prime contractor can enter into one five-year contract with its subcontractors, at all tiers, instead of five separate actions. he prime contractor will also experience administrative cost reductions in the production planning processes since they will only be required to perform that process once, instead of five times under an annual contracting scenario. dditionally, given a five-year contract, suppliers will have a greater total business base and stability than would otherwise be the case. s such, they will have added incentive and more opportunity to identify innovative processes and justify capital investments necessary to reduce costs. b. tability of equirement: he requirement for the lock I actical omahawk ll p ound is based on the omahawk aseline I perational equirements ocument () approved 1 eb 00. he has been updated to reflect the evolution of operational requirements including increased system flexibility to support receipt of missile/mission status, enroute retargeting of the missile to alternate preplanned and preloaded aimpoints or missions via third party command, reduced system response time to enable engagement of emerging and relocatable targets, and improved lethality against a wider target set. he Key erformance arameters identified in the have remained stable from program inception and are anticipated to remain stable through the production period. hese performance parameters have been flowed down and in some areas enhanced in the missile level specification required under the development and production contracts. s a critical first strike weapon, actical omahawk production is of operational significance to the leet ommanders, who consistently list omahawk inventory as one of their top fleet issues. he planned actical omahawk program contained in the budget will significantly improve inventory posture, a task which has become more critical after perations nduring reedom and Iraqi reedom where significant numbers of omahawks were expended in combat. he currently fielded lock III missile went out of production in 1998, and through emergency supplemental funds in 99 and 02, all remaining lock II and some older and urface- missiles will be remanufactured to lock III capability. nly 304 of the older and urface- missiles remain as potential remanufacture candidates, and these represent the least economically feasible pool for remanufacture. lock I actical omahawk production is the best candidate for increasing the inventory of omahawk issiles and will provide more capability at a quicker rate than another eman program could.

27 xhibit -1, ultiyear rocurement riteria rogram: actical omahawk c. tability of unding: he avy has demonstrated its commitment to a stable funding stream for the actical omahawk multiyear through every step of the process. he use of omahawk in recent operations has further reduced the inventory of omahawk assets to support future, deep-strike, land attack missions. ongress has expressed the desire to enter actical omahawk production at the earliest opportunity by providing additional funding in 02 (ongressional dd) for the procurement of non-recurring engineering/special tooling and test equipment to realize ull ate roduction levels as soon as possible and increasing 04 appropriation to $ (including congressional undistributed adjustments) for 350 missiles. In addition, the avy provided funding in 03 for the remaining non-recurring costs. d. table esign: he actical omahawk has undergone a five-year ngineering & anufacturing evelopment (&) phase. his phase included significant component level testing, level qualification testing, system level integration testing, unctional round ests and two ontractor evelopment est lights (-0 and -1) of the ll-p-ound. he -0 test flight was successfully conducted in ug 02, and the -1 test flight was successfully conducted in ov 02. oth test flights demonstrated and met all required test objectives. he technical success and design maturity demonstrated by the -0 and -1 tests allowed for the initiation of the ow-ate Initial roduction I (I-I) program in ct 02 and the I-2 option award in an 03, respectively. he actical omahawk is meeting and in most areas exceeding its design performance requirements. ll four H shots, including two live warhead shots, were flown in 2003 and each successfully met all test objectives. he program has completed all overnment echnical valuation (H) events and has entered perational valuation esting. perational valuation () testing will complete in 2 nd quarter 04 followed by Initial perational apability (I). he decision, ilestone III, is scheduled for 3 rd quarter of 04 with the multiyear procurement contract to be awarded immediately following. In conclusion, actical omahawk has completed its design development and is meeting and exceeding all design performance requirements. overnment testing activities will provide the final design interface verification assessment to ensure that the complete weapon system design configuration is stable prior to commencement of full rate production. he contractor s technical success, production and experience from prior lock omahawks, and the substantial knowledge gained over the actical omahawk s test program, provide for a technically mature design with which to enter into a.

28 xhibit -1, ultiyear rocurement riteria rogram: actical omahawk e. ealistic ost stimate: he rogram ffice in conjunction with the contractor, the I ost nalysis group (I-4.2), and I contracts (I-2.4) has participated in the formulation of a ommon ost odel. he avy enter for ost nalysis had an advisory position on this team. he ommon ost odel is based upon estimated costs to the rime contractor based on invoices, purchase orders, sub-contractor proposed prices, and the material and labor costs from I. his model was used to derive both projected ulti-year and nnualized costs by accounting for differences in sub-contractor proposals for multi-year versus stand-alone contracts. In addition to this ommon ost odel, formulated a projected unit cost based on parametric analysis. he estimated unit cost for actical omahawk in based on the ommon ost odel is within the range predicted by. f. ational ecurity: he Quadrennial efense eview, efense lanning uidance and avy on uclear rdinance equirement have set the requirements for omahawk significantly above current inventory levels. In support of ational ecurity requirements and future objectives, the establishment of a sustaining industrial base with surge capability for this critical first strike weapon is essential in supporting the ational ilitary trategy. 3. ource of avings: $ in illions Inflation 2.99 endor rocurement anufacturing ther otal dvantages of the his strategy has been structured to achieve significant savings ($133) over annualized procurements. he strategy is also planned to allow a quantity range of missiles in each, allowing the overnment the flexibility to meet emergent requirements for more missiles, potentially including that for foreign military sales customers, while maintaining the and the savings already established in the baseline. his flexibility can also yield missile deletions without forgoing benefits, but this may erode some of the overall savings due to a reduction in economies of scale and the amortization of non-recurring efforts, which will have already occurred.

29 xhibit -1, ultiyear rocurement riteria rogram: actical omahawk 5. Impact on Industrial ase: Implementation of this will also yield a favorable impact on the industrial base. he stability afforded by the use of a will allow the prime contractor to enter into long term agreements with subcontractors and suppliers, at every tier, which will provide substantial cost avoidance. uch long term agreements incentivize both the prime and subcontractors to invest in process improvements such as those cited above, thereby yielding long term benefits in terms of product quality and cost. he stability of the prime multiyear contract will also foster improved competition at the subcontractor level, as the offer of a longer term business arrangement will encourage more aggressive pursuit of a contract award. he contractor and subcontractors will face reduced risk when implementing production process improvements, facility improvements, tooling design improvements, and fabrication process improvements. he ability for the overnment and industry to enter into a long term agreement will allow industry the opportunity to place capital investments upfront, which reduces the overall cost and improves the quality of the actical omahawk missile. 6. ultiyear rocurement ummary: ($) nnual ontracts lternate Quantity 1,981 1,981 otal ontract rice $1,476.7 $1,343.9 ancellation eiling (highest point) unded nfunded $17.4 $ ost voidance ver nnual $132.8 % ost voidance ver nnual 9.0%

30 xhibit -2, otal rogram unding lan ate ebruary 2004 ppropriation/udget ctivity -1 ine Item omenclature Weapons rocurement avy/-2 ther issiles HWK (2)((W))(I:210200) otal rocurement Quantity nnual rocurement ross ost ess dv rocurement et rocurement (=-1) lus dv rocurement Weapon ystem ost ultiyear rocurement ross ost (-1) ess dv rocurement et rocurement (=-1) dvance rocurement or or or or or otal dv rocurement Weapon ystem ost ultiyear avings ($) ancellation eiling - unded ancellation eiling - nfunded nnual ultiyear avings emarks -1 hopping ist - Item o. 4

31 xhibit -3, ontract unding lan ate ebruary 2004 ppropriation/udget ctivity -1 ine Item omenclature Weapons rocurement avy/-2 ther issiles HWK (2)((W))(I:210200) otal rocurement Quantity nnual rocurement ross ost ess dv rocurement et rocurement (=-1) lus dv rocurement ontract rice ultiyear rocurement ross ost (-1) ess dv rocurement et rocurement (=-1) dvance rocurement or or or or or otal dv rocurement ontract rice ultiyear avings ($) ultiyear avings (%) 9.0% ancellation eiling - unded ancellation eiling - nfunded nnual ultiyear avings emarks -1 hopping ist - Item o. 4

32 xhibit -4, resent alue nalysis ate ebruary 2004 ppropriation/udget ctivity -1 ine Item omenclature Weapons rocurement avy/-2 ther issiles HWK (2)((W))(I:210200) otal nnual roposal hen ear ost 2, , , , , , , ,476, onstant ear ost 2, , , , , , , ,443, resent alue 2, , , , , , , ,346, ultiyear rocurement hen ear ost 8, , , , , , , ,343, onstant ear ost 8, , , , , , , ,314, resent alue 8, , , , , , , ,226, ifference hen ear ost -5, , , , , , , , onstant ear ost -6, , , , , , , , resent alue -6, , , , , , , , emarks -1 hopping ist - Item o. 4

33 III: II I III H : -40 ebruary 2004 II/ II -1 I Weapons rocurement, avy omahawk Q () rogram lement for ode Items: ther elated rogram lements 2/ther issiles.. # rior I o ears ode omplete otal (In illions) $ $ II II: omahawk provides an attack capability against targets on land (omahawk and ttack issile ()), and can be launched from both surface ships () and submarines (). omahawk consists of the following variants: (1) -109, and ttack uclear; (2) /-109, ntiship; (3) /-109, and ttack onventional; (4) /-109, and ttack ubmunition ispenser; (5) /-109, actical omahawk. he and ttack nti-ship urface aunch uclear versions are no longer in leet use. he land-attack version in the leet is used for precision destruction of targets at long range. roduction of the actical omahawk missile began with ow ate Initial roduction (I) buys of 25 in 2002 and 167 in ull rate production will commence in unit cost based on approval of multi-year procurement () is the only year that includes advanced procurement funding for the ulti-ear rocurement () contract. he amount includes conomic rder Quantity (Q) requirements to support the contract. orm 2454, 86-1 HI I Item o. 4 age o. 1 III: II

34 xhibit -10 dvance rocurement equirements nalysis ate: (age 1 - unding) ebruary 2004 ppropriation (reas) ode////item ontrol umber -1 ine Item omenclature Weapons rocurement, avy/-2, ther issiles omahawk Q () Weapon ystem irst ystem (1) ward ate Interval etween ystems omahawk une 2004 vg 9 issiles er Week ($ in illions) When rior o qd ears omplete otal actical omahawk Qty Q otal escription: his line item funds Q requirements for the 2004 through 2008 omahawk program. -1 hopping ist Item o. Item o. 4 age o. 2 xhibit -10, dvance rocurement equirements nalysis

35 xhibit -10 dvance rocurement equirements nalysis ate: (age 2 - udget ustification) ebruary 2004 ppropriation (reasury) ode////item ontrol umber Weapon ystem -1 ine Item omenclature Weapons rocurement, avy/-2, ther issiles omahawk omahawk Q () nd Item Q nit ost (, $ in illions) for ontract otal ost 2004 Qty orecast ate equest 2004 for 2005 Qty 2004 ontract orecast ate 2004 otal ost equest actical omahawk Q un otal dvance roc escription: -1 hopping ist Item o. xhibit -10, dvance rocurement unding Item o. 4 age o. 3

36 III: II II/ II Weapons rocurement, avy -2: ther issiles I III H : -40 ebruary I volved W issile () (I#230700) rogram lement for ode Items: ther elated rogram lements , roj and rior I o otal ode omplete rogram QI ($) $117.1 $42.0 $102.0 $80.3 $99.1 $99.2 $115.9 $98.6 $338.4 $1,092.6 Initial pares ($) $0.6 $1.8 $1.0 $1.2 $1.5 $1.8 $2.1 $2.3 ont. $12.3 IW: he volved W issile () rogram is an international cooperative effort to design, develop, test, and produce a new and improved version of the W missile (I-7) with the kinematic performance to defeat current and projected threats that possess low altitude, high velocity and maneuver characteristics beyond the engagement capabilities of the I-7. he will provide an evolved kinematically improved aft-end missile section for mating, as an all up round, with the modified I-7 forebody guidance and warhead section. he improvement will provide the capability to counter maneuvering anti-ship missiles, expand battle space, and increase system firepower. he is designed for "quad pack" use in the K41 ertical aunching ystem. is a cooperative effort among ten W nations (ustralia, anada, enmark, ermany, reece, etherlands, orway, pain, urkey, and the..). n addendum to the W urface issile ystem emorandum of nderstanding (), covering the ngineering and anufacturing evelopment () phase of the was signed in une he for the cooperative production of was signed 27 ecember 1997 with an initial.. production intent of 2076 missiles. he current.. production intent is 1024 missiles. uthority to enter into ow ate Initial roduction (I) for 207 missiles was granted 07 arch he 05 request will support the first ull ate roduction contract award of 71 missiles plus.. share of support as defined in the. dditionally, the.. is required to pay its share of non-recurring investment for performance characterization studies. & funding is included in program element , roject and the program element , roject orm 2454, 86-1 HI I III: I II

37 III: II W I Weapon ystem : -5 volved W issile () ebruary 2004 II/ II I ode -1 I /H H Weapons rocurement, avy -2: ther issiles I H I ode 2002 and rior otal ost Quantity nit ost otal ost Quantity nit ost otal ost Quantity nit ost otal ost Quantity nit ost otal ost 001 issile Hardware K 41/I ll-p-ound 35, , , ,368 K 29 ll-p-ound , ,480 Warhead ompatible elemeter (W) 1, , uze ackfit 4,700 hipping ontainers adome ife of ype buy 832 2,947 H-434 ropellant inder (W) 600 ocket motors (W) 1, ,000 K 25 Quadpack anisters 3, , , ,914 otal Hardware 47,800 26,214 74,649 60, rocurement upport ooling and est quipment 17,486 1,400 2,818 eformance haracterization 5,795 10,000 5,000 roduction ngineering 45,984 14,412 14,542 14,698 otal rocurement upport 69,265 15,812 27,360 19,698 otal lyaway ost 117,065 42, ,009 80, leet upport otal leet upport Weapon ystem ost 117,065 42, ,009 80, ,065 42, ,009 80, , 86-1 HI I III: I. 5 2 II

38 III: II HI I XHII (-5) Weapon ystem. ebruary II/ II. -1 I H Weapons rocurement, avy -2 ther issiles ost lement/ QI I I I H W I I II I & I I W I (000) I K 41/I ll-p-ound ct 2001 / aytheon o., ucson Z ec 02 eb 05 es ar 00 W ct 2001 / aytheon o., ucson Z ec 02 eb 05 es ar 00 K 25 anister an 2003 / nited efense, inneapolis, un 03 ov 04 es I K 41/I ll-p-ound ay 2003 / aytheon o., ucson Z ov 03 pr 05 es ar 00 K 29 ll-p-ound ay 2003 / aytheon o., ucson Z ov 03 pr 05 es ar 00 W ay 2003 / aytheon o., ucson Z ov 03 pr 05 es ar 00 hipping ontainer 19 8 ay 2003 / aytheon o., ucson Z ov 03 pr 05 es ar 00 ocket otor (W) I lliant echsystems, ocket enter W K 25 anister ct 2003 / nited efense, inneapolis, an 04 ul 05 es I K 41/I ll-p-ound ay 2004 / aytheon o., ucson Z ov 04 ov 06 es ar 00 K 29 ll-p-ound ay 2004 / aytheon o., ucson Z ov 04 ov 06 es ar 00 W ay 2004 / aytheon o., ucson Z ov 04 ov 06 es ar 00 hipping ontainer 18 8 ay 2004 / aytheon o., ucson Z ov 04 ov 06 es ar 00 K 25 anister ct 2004 / nited efense, inneapolis, an 05 ul 06 es. K long lead material contract or the -04 procurement was awarded in ov stimated award date of the full contract is eb orm , 87-1 HI I lassification: I. 5 3 II

39 2004/05 I H, -21 ebruary 2004 II/ II Weapon ystem -1 I Weapons rocurement, avy/-(2) ther issiles 2 I roduction ate rocurement eadtimes anufacturer's rior fter Initial eorder nit of Item ame and ocation X to ct 1 ct 1 fg fg otal easure W II aytheon o, ucson Z K 25 I nited efense, inneapolis I 2002 I 2003 I / Q /aytheon K 25 anister/nited efense ` I 2004 I 2005 I / Q /aytheon K 25 anister/nited efense /aytheon K 25 anister/nited efense /aytheon K 25 anister/nited efense emarks: orm 2445, 87 revious editions are obsolete -1 HI I 311 / 244 I xhibit -21 roduction chedule

40 2004/05 I H, -21 ebruary 2004 II/ II Weapon ystem -1 I Weapons rocurement, avy/-(2) ther issiles 2 I roduction ate rocurement eadtimes anufacturer's rior fter Initial eorder nit of Item ame and ocation X to ct 1 ct 1 fg fg otal easure anufacturer's rior fter Initial eorder nit of Item ame and ocation X to ct 1 ct 1 fg fg otal easure W II aytheon o, ucson Z K 25 I nited efense, inneapolis I 2006 I 2007 I / Q /aytheon K 25 anister/nited efense /aytheon K 25 anister/nited efense I 2008 I 2009 I / Q /aytheon K 25 anister/nited efense emarks: 14 orm 2445, 87 revious editions are obsolete 311 / xhibit -21 roduction chedule

41 III: II I III H : -40 eb 2004 II/ II -1 I Weapons rocurement, avy/ 2 ther issiles rogram lement for ode Items: ther elated rogram lements rior I o otal ears ode omplete rogram QI 1, ,419 ($) $1,131.2 $50.0 $37.4 $33.9 $82.5 $100.6 $85.1 $87.0 $104.1 $1,711.7 Initial pares ($) $25.5 $0.4 $0.4 $0.4 $0.9 $1.2 $2.2 $3.0 $3.0 $37.0 otal ($) $1,156.7 $50.4 $37.8 $34.3 $83.4 $101.8 $87.3 $90.0 $107.1 $1,748.7 nit ost ($) $0.727 $0.657 $0.890 $0.737 $0.817 $0.671 $0.608 $0.580 $0.853 $0.708 II II: he dvanced edium ange ir-to-ir issile () is the next generation all-weather, all-environment radar guided missile developed by the ir orce and avy. is smaller, faster, lighter, and has improved capabilities against very low-altitude and high-altitude targets in an electronic countermeasure environment. incorporates an active radar in conjunction with an inertial reference unit and microcomputer system which makes the missile less dependent upon the aircraft fire control system. his advanced capability enables the pilot to aim and fire several missiles at multiple targets III: 46 missiles will be procured in 2005 along with non-recurring support costs such as; government field activity technical, test, and logistics support, procurement of test articles, test equipment to support the I-120 configuration, and procurement of peculiar support equipment. 03 matches actual program value as of 30 eptember olumns may not add due to rounding. -1 HI I III: orm 2454, 86 I 6 1 II