CBO Estimates That 2013 Shipbuilding Plan Will Cost More Than the Navy Said

By MarEx 2012-07-27 09:50:02

An Analysis of the Navy’s Fiscal Year 2013 Shipbuilding Plan

Since 2006, CBO has performed an analysis of the Navy’s annual report on its plans for building new ships over the next 30 years. This CBO report summarizes the ship inventory goals and purchases described in the Navy’s 2013 plan and assesses their implications for the Navy’s funding needs and ship inventories through 2042.

The Navy’s 2013 Long-Term Shipbuilding Plan Reduces Ship Purchases and Alters the Composition of Purchases

The 2013 plan contains some significant changes in the Navy’s goals for shipbuilding during the next 30 years. Compared to the 2012 plan, the 2013 plan:

  • Reduces the goal for the inventory of ships from 328 to a range of 310 to 316,
  • Reduces the number of ships to be purchased from 275 to 268, and
  • Buys 17 more high-end combat ships and 24 fewer less-expensive support ships.

CBO Estimates That the 2013 Plan Will Cost More Than the Navy Estimates

The Navy estimates that the cost for new-ship construction under its plan would be $505 billion over 30 years, or an average of $16.8 billion per year (all figures are in 2012 dollars). In contrast, CBO estimates that the Navy’s intended new-ship construction would cost $599 billion over 30 years, or an average of $20.0 billion per year.

CBO’s estimate of the costs for new-ship construction over the next 30 years is 19 percent higher than the Navy’s estimate, but average annual costs vary by decade. As shown in the figure below, CBO’s estimates are 11 percent higher than the Navy’s for the first 10 years of the plan, 13 percent higher for the following decade, and 33 percent higher for the final 10 years of the plan.

The figures above are solely for the construction of new ships, the only type of costs reported in the Navy’s 30-year shipbuilding plans. Total shipbuilding costs—which include new construction, refueling of nuclear-powered aircraft carriers, and some other items—would average about $19 billion per year using the Navy’s figures. Under CBO’s estimate, total shipbuilding costs would average about $22 billion per year.

The Navy’s 2013 Plan Would Fall Short of Meeting the Service’s Inventory Goal for Some Types of Ships

The Navy’s plan would not meet the service’s goals for inventories of destroyers, attack submarines, and ballistic missile submarines:

  • Destroyers would fall below the goal of about 90 after 2029;
  • Attack submarines would fall below the goal of about 48 between 2022 to 2034; and
  • Ballistic missile submarines would fall below the goal of 12 to 14 between 2029 and 2041.

The Navy’s plan would largely meet its inventory goals for aircraft carriers and amphibious ships.

Historical Average Funding Would Be Insufficient to Cover the Shipbuilding Contained in the 2013 Plan

If the Navy receives the same amount of funding for new-ship construction in the each of the next 30 years as it has on average over the past three decades—$14.3 billion annually—it will not be able to afford all of the purchases in the 2013 plan. CBO’s estimate of $20.0 billion per year for new-ship construction in the Navy’s 2013 shipbuilding plan is about 40 percent above the historical average funding. CBO’s estimate of $21.9 billion per year for the full cost of the Navy’s shipbuilding program is about 37 percent higher than the $16.0 billion the Navy has spent each year on average for all items in its shipbuilding accounts over the past 30 years.


Source: Congressional Budget Office