The Congressional Budget Office (CBO) released a report this week projecting higher costs for procuring ships over the next three decades than the Navy estimates.
The CBO estimated the cost for the final 10 years will be 33 percent higher than the Navy’s projection of $15.9 billion annually outlined in the shipbuilding plan (Defense Daily, March 29, 2012). The CBO anticipates a 19 percent higher cost than the Navy’s current estimate for the entire 30-year plan.
The Navy released its annual 30-year shipbuilding plan in March, and it was followed this week by the yearly CBO analysis of it.
The Navy expects its average yearly total shipbuilding cost to be $16.8 billion over the 30-year period, with an annual average of $15.1 billion per year before jumping to $19.5 billion in the mid-term before receding to the $15.9 billion figure.
The jump takes into account the procurement of the next generation of ballistic missile submarines expected to begin in 2021. Navy officials have already warned the Ohio-class replacement program will put a major squeeze on its shipbuilding budget.
The Navy plans to buy 268 combat and support vessels over the next three decades to sustain a fleet of “about 300 ships” at a total cost of $505 billion beginning in fiscal 2013, the CBO said. The current fleet sits at 286 ships and the Navy hopes to reach the 300 mark in 2019.
The CBO outlines a much higher procurement cost of $599 billion through fiscal 2042, or an average of $20 billion a year compared to the Navy’s overall estimate of $16.8 billion annually. The CBO said its number rises to $21.9 billion annually when taking into account the mid-life refueling of nuclear-powered aircraft carriers and other costs.