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Costs of Building a 355-Ship Navy 1 (April 24, 2017)

handle is hein.congrec/cbo3431 and id is 1 raw text is: CAPRIL2017 Costs of Building a 355-Ship Navy Summary In December 2016, the Navy released a new force structure assessment (FSA) that called for a fleet of 355 ships-substantially larger than the current fleet of 275 ships and also larger than the Navy's previously stated goal of 308 ships.' In response to a request from the Subcommittee on Seapower and Projection Forces of the House Committee on Armed Services, the Congressional Budget Office has estimated the costs of achieving the Navy's objective within 15, 20, 25, or 30 years. As part of its analysis of those alternatives, the agency assessed the implications of building and operating a 355-ship fleet, including the number of ship purchases that would be necessary, prospective inventory levels, personnel require- ments, and effects on the shipbuilding industry. To enlarge the Navy to 355 ships would require a substantial investment of both money and time. CBO estimates that the earliest the Navy could achieve its goal of a 355-ship fleet would be in 2035, or in about 18 years, provided that it received sufficient funding. However, the cost to build and operate a 355-ship fleet would average $102 billion per year (in 2017 dollars) through 2047, CBO estimates, or more than one-third greater than the amount appropriated for fiscal year 2016 for today's 275-ship fleet. On average under CBO's alternatives, 1. See Department of the Navy, Executive Summary, 2016Navy Force Structure Assessment (PSA) (December 15, 2016), http://tinyurl.com/zgdk5o7. The 2016 FSA does not describe the annual ship purchases or costs needed to reach 355 ships. Such information presumably would be forthcoming when the Navy releases its next long-term shipbuilding plan. For further discussion, see Ronald O'Rourke, Navy Force Structure and Shipbuilding Plans: Background andIssues for Congress, Report for Congress RL32665 (Congressional Research Service, February 2, 2017). The Navys previously stated goal of 308 ships was described in a 2014 update to its 2012 force structure assessment, which CBO refers to in this report as the 2014 FSA. shipbuilding costs would be at their highest point over the next 10 years, while operating costs would be high- est between 2037 and 2047, once the fleet numbered 355 ships. Shipbuilding Costs CBO estimates that, over the next 30 years, meeting the 355-ship objective would cost the Navy an average of about $26.6 billion (in 2017 dollars) annually for ship construction, which is more than 60 percent above the average amount the Congress has appropriated for that purpose over the past 30 years and 40 percent more than the amount appropriated for 2016. By comparison, CBO estimates that the Navy's 2017 shipbuilding plan-which is based in part on the 308-ship goal outlined in the ser- vice's 2014 FSA-would cost an average of $21.2 billion per year to implement over the next 30 years. However, the Navy's 2017 shipbuilding plan would fall short of the 308-ship force goal in 22 of the next 30 years.2 To establish a 355-ship fleet, the Navy would need to purchase around 329 new ships over 30 years, compared with the 254 ships that would be purchased under the Navy's 2017 shipbuilding plan (see Table 1).3 In particular, over the next five years, the Navy would purchase about 12 ships per year under CBO's alternatives compared 2. See Congressional Budget Office, An Analysis of the Navy' Fiscal Year 2017 Shipbuilding Plan (February 2017), www.cbo.gov/ publication/52324. That report estimated that the Navy's 2017 shipbuilding plan would cost $20.7 billion per year in 2016 dollars. Adjusting that figure for inflation yields a cost of $21.2 billion in 2017 dollars. See also Department of the Navy, Report to Congress: Force Structure Assessment (February 2015). 3. See Department of the Navy, Report to Congress on the Annual Long-Range Plan for Construction of Naval Vesselsfor Fiscal Year 2017 (July 2016), https://news.usni.org/2016/07/12/20627. Note: Unless otherwise indicated, all dollars in this report are expressed in constant 2017 dollars and all years are federal fiscal years, which run from October 1 to September 30 and are designated by the calendar year in which they end. Numbers in the text and tables may not add up to totals because of rounding.

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