CBO Weighs in on Shipbuilding

CBO has weighed in with a timely report An Analysis of the Navy's Fiscal Year 2011 Shipbuilding Plan. In a conclusion I know all of us will find shocking - CBO finds the latest shipbuilding plan unaffordable.

The SSBN(X) section caught my attention.

SSBN(X) Future Fleet Ballistic Missile Submarine. The design, cost, and capabilities of the SSBN(X), the submarine slated to replace the Ohio class, are among the most significant uncertainties in the Navy’s and CBO’s analyses of future shipbuilding. The Navy’s 2007 and 2008 plans assumed that the first SSBN(X) would cost $4.5 billion (in 2010 dollars) and that subsequent ships in the class would cost about $3.4 billion apiece.18 The 2009 plan explicitly excluded the costs of the SSBN(X) class, although it included 12 of those submarines in its projected inventories. The 2011 plan, in contrast, includes the costs of the SSBN(X) class—with an estimate that highlights the great expense of replacing current ballistic missile submarines and the effect that effort could have on other shipbuilding programs.

Specifically, the Navy now estimates that the lead SSBN(X) will cost about $9 billion and that building 12 of the new submarines will cost $86 billion, or an average of about $7.2 billion apiece. The Navy’s 2011 report states that those estimates are “consistent with the escalated cost of the OHIO class SSBN.” However, escalating (that is, inflating) the actual costs of the Ohio class submarines would produce an average cost of only about $3.1 billion per submarine in 2010 dollars. Navy officials subsequently clarified that the service’s estimate is based on the cost to build Ohio class submarines in today’s industry conditions and with today’s technology. Under the 2011 plan, however, the first SSBN(X) would be authorized in 2019 (although advance procurement money would be needed starting in 2015 for items with long lead times). The second submarine would be purchased in 2022, followed by one per year from 2024 to 2033.

In most of its recent naval analyses, CBO assumed that the SSBN(X) would be smaller and would carry fewer weapons than existing ballistic missile submarines— specifically, that it would have 16 missile tubes instead of the 24 on today’s SSBNs and would displace around
15,000 tons submerged, compared with 18,750 tons for an existing Ohio class submarine. But in a recent briefing to CBO and the Congressional Research Service, the Navy stated that an SSBN(X) would probably be about the same size and have roughly the same displacement as an Ohio class submarine, even though it might have only 16 or 20 missile tubes. Over time, technological advancements tend to add weight to a submarine design (compared with the same submarine produced 30 years earlier). If the Ohio class was being built today with the same capability to launch ballistic missiles, it would actually be much larger than 18,750 tons. Thus, a new SSBN with fewer than 24 missile tubes would probably still be equivalent in displacement to an Ohio class submarine. For those reasons, in its analysis, CBO adopted the Navy’s assumption about the size of the SSBN(X).

CBO estimates that the lead SSBN(X) will cost about $13 billion if it is purchased in 2019. Estimating the cost of that submarine is particularly difficult because it is not clear how much the Navy will need to spend on nonrecurring engineering and detail design. The Navy spent about $2 billion on those items—out of a total of more than $5 billion—for the lead Virginia class attack submarine, which is about 60 percent smaller than the first Ohio class submarine. CBO assumed that the cost of nonrecurring items would be proportional to the weight of the new submarine, so it estimated more than $4 billion for those items. (The Navy appears to have assumed that nonrecurring items for the lead SSBN(X) would cost about $2 billion.)

The historical track record for the lead ship of new classes of submarines in the 1970s and 1980s implies little difference on a per-ton basis between a lead attack submarine (SSN) and a lead SSBN (see Figure 5). If that pattern continued, the per-ton cost of the SSBN(X) would be about the same as that of the first Virginia class SSN.

Overall, 12 SSBN(X)s would cost a total of about $99 billion in CBO’s estimation, or an average of $8.2 billion each. Another $10 billion to $15 billion would be needed for research and development, for a total program cost of more than $110 billion. Those estimates appear to differ from the Navy’s mainly because the Navy priced the SSBN(X) as though it were being built today, whereas CBO incorporated the effects that higher shipbuilding inflation would have on submarines built 10 to 20 years from now.

If I was the Navy, I would welcome this dire cost estimate by the CBO for the SSBN(X).