Today, the U.S. Navy numbers about 300 ships, including a force of 115 surface combatants (cruisers, destroyers, and frigates). For the past six years, the official force goal for surface combatants was 116. But recently, senior Navy officials have argued that the nation needs a larger Navy: 375 ships, including a surface combatant force of 160 ships. That force would comprise 104 large cruisers and destroyers as well as 56 new, much smaller vessels called littoral combat ships--which are expected to be an important element of the Bush Administration's plans for transforming the Navy. Those ships are intended to counter potential threats in the world's coastal regions that, if left unchecked, could inhibit the Navy's freedom of action. At the same time that it hopes to expand the fleet, however, the Navy plans to retire many existing surface combatants early.

Reaching the Navy's new force goal by building more surface combatants would require a substantial investment, which would compete with other demands, including different transformation efforts and ship programs. Are there ways to transform the surface combatant force within today's funding level? This Congressional Budget Office (CBO) study--prepared at the request of the Subcommittee on Seapower of the Senate Committee on Armed Services--examines that question. It looks at the Navy's modernization plans for the surface combatant force and their budgetary implications. The analysis also evaluates three options that would modernize and transform that force at the current funding level. In keeping with CBO's mandate to provide objective, impartial analysis, this study makes no recommendations.

Eric J. Labs of CBO's National Security Division wrote the study under the general supervision of J. Michael Gilmore. Raymond Hall of CBO's Budget Analysis Division prepared the cost estimates and wrote the appendix under the general supervision of Jo Ann Vines. Ian MacLeod of the National Security Division helped review the manuscript for factual accuracy. Lyle Nelson, Arlene Holen, David Moore, Dennis Zimmerman, Tracy Foertsch, and R. William Thomas of CBO provided thoughtful comments on an earlier draft of the study, as did several officials of the Department of the Navy. In addition, numerous Navy officials and analysts answered many requests for information. The author is especially grateful to Robert Work of the Center for Strategic and Budgetary Assessments, whose insights and comments were extremely valuable. (The assistance of such external participants implies no responsibility for the final product, which rests solely with CBO.)

Joseph Foote and Christian Spoor edited the study, and Leah Mazade proofread it. Kathryn Winstead prepared the study for publication. Lenny Skutnik printed the initial copies, and Annette Kalicki prepared the electronic versions for CBO's Web site.

Douglas Holtz-Eakin
Director
March 2003