The Navy is required by law to submit a report to the Congress each year that projects the
service's shipbuilding requirements, procurement plans, inventories, and costs over the coming
30 years. Since 2006, the Congressional Budget Office (CBO) has been performing an
independent analysis of the Navy's latest shipbuilding plan at the request of the Subcommittee
on Seapower and Expeditionary Forces of the House Armed Services Committee. This CBO
report, the latest in that series, summarizes the ship requirements and purchases described in
the Navy's 2011 plan and assesses their implications for the Navy's funding needs and ship
inventories through 2040.
The Navy currently envisions buying a total of 276 ships over 30 years at an average annual
cost of about $16 billion (in 2010 dollars) for new construction alone or roughly $18 billion
for total shipbuilding (which includes new-ship construction, refueling of nuclear-powered
aircraft carriers, and other costs related to shipbuilding). By comparison, CBO estimates the
costs of the Navy's plan at an average of $19 billion per year for new construction or $21 billion
per year for total shipbuilding. In keeping with CBO's mandate to provide impartial analysis,
this study makes no recommendations.
At the direction of the Congress, the Department
of the Navy issues annual reports that describe its plans
for ship construction over the coming 30 years. The latest
report--issued in February and covering fiscal years 2011
to 2040--contains some significant changes in the Navy's
long-term goals for shipbuilding. The new plan appears
to increase the required size of the fleet compared with
earlier plans, while reducing the number of ships to be
purchased--and thus the costs for ship construction--over the next three decades. Despite those reductions, the
total costs of carrying out the 2011 plan would be much
higher than the funding levels that the Navy has received
in recent years, according to analysis by the Congressional
Budget Office (CBO). Specifically:
- Language in the 2011 shipbuilding plan and in related
briefings by the Navy implies that the service's requirement
for battle force ships (aircraft carriers, submarines,
surface combatants, amphibious ships, and
some logistics and support ships) now totals 322 or
323--up from 313 in the Navy's three previous longterm
plans. The battle force fleet currently numbers
286 ships. (Summary Box 1 describes the major ships
in the Navy's fleet.)
- The 2011 plan calls for buying a total of 276 ships
over the 2011–2040 period: 198 combat ships and 78
logistics and support ships (see Summary Table 1).
That construction plan is insufficient to achieve a
322- or 323-ship fleet.
- In comparison, the previous shipbuilding plan (for
2009) envisioned buying 40 more combat ships and
20 fewer support ships over 30 years. Under that
plan, the Navy would have purchased 238 combat
ships and 58 logistics and support ships between 2009
and 2038, for a total of 296.
- If the Navy receives the same amount of funding for
ship construction in the next 30 years as it has over the
past three decades--an average of about $15 billion a
year in 2010 dollars--it will not be able to afford all of
the purchases in the 2011 plan.
- The Navy estimates that buying the new ships in the
2011 plan will cost an average of about $16 billion per
year, or a total of $476 billion over 30 years (about
33 percent less than its estimate for the 2009 plan). Those figures are solely for construction of new
ships, the only type of costs reported in the Navy's shipbuilding plans. However, other activities that are
typically funded from the Navy's budget accounts for
ship construction--such as refueling nuclear-powered
aircraft carriers and outfitting new ships with various
small pieces of equipment after the ships have been
built or delivered--will add about $2 billion to the
Navy's average annual shipbuilding costs under the
2011 plan, in CBO's estimation.
- Using its own models and assumptions, CBO estimates
that the cost for new-ship construction under
the 2011 plan will average about $19 billion per year,
or a total of $569 billion through 2040. Including
the expense of refueling aircraft carriers as well as outfitting
and postdelivery costs raises that average to
about $21 billion per year, CBO estimates. (Those figures
are about 25 percent lower than CBO's estimates
of the Navy's 2009 plan.)
- CBO's estimates of the costs of the 2011 shipbuilding
plan are about 18 percent higher than the Navy's estimates
overall. That figure masks considerable variation
over time, however: CBO's estimates are 4
percent higher than the Navy's for the first 10 years of
the plan, 13 percent higher for the following decade,
and 37 percent higher for the final 10 years of the plan
(see Summary Figure 1). Those differences result
partly from different estimating methods and different
assumptions about the design and capabilities of
future ships. The estimates also diverge because CBO
accounted for the fact that costs of labor and materials
have traditionally grown much faster in the shipbuilding
industry than in the economy as a whole, whereas
the Navy does not appear to have done so. That difference
becomes more pronounced over time.