CBO Predicts Cost Growth for U.S. Navy's Future Frigate

In a report released Tuesday, the Congressional Budget Office said that it believes the U.S. Navy may be uinderestimating the cost of the future Constellation-class frigate series by as much as 40 percent, based upon its own modeling. 

The Navy has signed a contract to build the FFG(X) future frigate - recently named the Constellation-class - for about $8.7 billion for 10 hulls, or about $870 million per ship. The vessel is an up-armed variant of the Italian/French FREMM frigate design, a proven hull form already in service in several nations. In size, it will occupy a middle ground between the Oliver Hazard Perry-class (the Navy's last full-fledged frigate) and the Arleigh Burke-class destroyer, the backbone of the surface fleet. Like all the Navy's current destroyers and cruisers - but unlike the Littoral Combat Ship it will replace in future production - FFG(X) will be fitted with vertical launch system (VLS) cells capable of carrying SM-class missiles. 

CBO noted that the Navy has not built a surface combatant at such a low cost per ton in fifty years, even when considering much less capable vessels. On a tonnage basis, it is even priced below the U.S. Coast Guard's Legend-class cutter and both classes of the lightly-armed Littoral Combat Ship program.

The low projected price for FFG(X) could grow, CBO suggested, much as it has in prior programs. The Arleigh Burke-class, Zumwalt-class and LCS-class ships all experienced cost growth above initial estimates - in the case of LCS, by more than 150 percent. 

The contract with shipbuilder Fincantieri is fixed-price, but CBO warned that it could rise in the event of design changes during construction. "A fixed-price contract may not succeed in limiting costs to the government . . . First, fixed prices might not remain unchanged if the contract permits them to be increased to take into account changes in circumstances that are judged to be beyond the contractor’s control. Second, costs may rise on a fixed-price contract when the government makes major changes to the specifications of a shipbuilding program," cautioned CBO.

Based on its analysis of previous shipbuilding programs, CBO's own estimate for the price of FFG(X) is in the range of $1.2 billion per hull. The cost of a new Flight III Arleigh Burke destroyer - designed with three times as many VLS cells as FFG(X) - is about $1.37 billion.