The Navy is defending the service’s 30-year shipbuilding plan following a report by the Congressional Budget Office (CBO) this week that projected higher costs for procuring ships over the next three decades than the Navy estimates.
The Navy noted that the CBO and service use different methodologies for determining long-range costs and it was confident in estimates through fiscal 2032, but conceded that from 2033 to 2041 the figures are less reliable.
The Navy released its annual 30-year shipbuilding plan in March, and it was followed this week by the yearly CBO analysis of it.
“Our current shipbuilding plan balances anticipated future demands for naval forces with expected resources,” the Navy said in a blog write-up it plans to post later Friday evening. “With anticipated future fiscal realities, we focus our investments to ensure the battle force is capable of meeting the Navy’s core missions, along with the capacity to operate forward in the most critical regions.”
“The goal is to work within fiscal limitations to meet these core mission responsibilities with needed capacity,” it said.
The Navy acknowledged, however, that the estimate for the final 10 years of the plan through fiscal 2042 “simply assumes a one-for-one replacement for ships expected to retire during this period.”
“Due to the strategic environment and changing technology, the next 20-30 years are sure to be much different than today, ship and cost projections during this period are much more speculative,” they said.
The CBO estimated the cost for the final 10 years of the plan will be 33 percent higher than the Navy’s projection of $15.9 billion annually outlined in the shipbuilding plan (Defense Daily, Mar. 29, 2012). The CBO anticipates a 19 percent higher cost than the Navy’s current estimate for the entire 30-year plan.
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.