New CBO report takes a hard look at Navy shipbuilding plans

The Congressional Budget Office (CBO) has released its latest analysis of U.S. Navy shipbuilding plan costs. Not for the first time, the CBO report finds costs would be higher than the Navy estimates and that the average annual appropriation required would be substantially higher than the average over the past five years.

As we’ve noted oftentimes, the Navy is the U.S. shipbuilding industry’s largest customer, so we can expect the CBO report to provide industry leaders with some less than light reading over the weekend. Defense strategists will also be looking hard at the CBO’s take on how the AUKUS submarine program will impact the U.S. Navy’s own inventory of Virginia class submarines.

Here’s the CBO’s own at-a-glance summary of its report:

Each year, as directed by the Congress, the Department of Defense submits a report with the
President’s budget describing the Navy’s planned inventory, purchases, deliveries, and retirements
of ships in its fleet for the next 30 years. Like the Navy’s shipbuilding plan for fiscal year 2023, its
2024 plan provides three alternative long-range projections of its future fleet rather than one. In this
report, the Congressional Budget Office analyzes the alternatives in the 2024 plan and estimates the
costs of implementing each of them. Overall, the objectives of the three alternatives in the 2024 plan
are similar to those in the 2023 plan, but the costs have increased substantially, largely reflecting
higher estimated costs for submarines.

Cost. The three alternatives in the Navy’s 2024 plan would require average annual shipbuilding
appropriations that were 31% to 40% more than the average over the past five years.
CBO estimates that total shipbuilding costs would average about $34 billion to $36 billion (in
2023 dollars) over the next 30 years, which is about 16% more than the Navy estimates.
Compared with its estimates for the 2023 plan, CBO’s estimates increased by between 5%
and 10% in real (inflation-adjusted) terms, depending on the alternative. To support
the 2024 plan, the Navy’s total budget would increase from $245 billion today to between
$315 billion and $330 billion (in 2023 dollars) in 2053.

Purchasing Plan. The Navy would purchase 290 battle force ships under Alternative 1, 299 under
Alternative 2, and 340 under Alternative 3. (Battle force ships include aircraft carriers, submarines,
surface combatants, amphibious ships, combat logistics ships, and some support ships.)
Overall, Alternative 1 places slightly more emphasis on buying large surface combatants than
Alternative 2 does. Under Alternative 2, the Navy would buy more submarines than under the
other alternatives, although it would purchase more existing classes of submarines and fewer next-
generation submarines. Under Alternative 3, the Navy would buy more ships of all types, except
for submarines, than under the other alternatives. (The 2024 plan offers few details about the costs
or quantities of unmanned surface or undersea vessels.)

Fleet Size. If the Navy adhered to the schedule for purchases and ship retirements outlined in its
2024 plan, by 2053 the number of battle force ships would increase from 290 today to 319 under
Alternative 1, 328 under Alternative 2, and 367 under Alternative 3. In all three cases, the fleet
would be smaller over the next 10 years than it is today, before increasing in size.

Fleet Capabilities. Under all three alternatives, the Navy would reduce the fleet’s firepower over
the next decade but would eventually expand its missile capability by increasing the number of
missile cells (which are vertical tubes or launchers on surface ships and submarines that carry the
Navy’s offensive and defensive missiles) and deploying them on more ships than they are deployed
on today.

Under the three alternatives in the Navy’s 2024 plan, total shipbuilding costs would average about $34 billion to $36 billion per year (in 2023 dollars) through 2053, CBO estimates, as the Navy built a fleet of 319 to 367 battle force ships.

• Download the CBO report HERE