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Military Personnel

CBO estimates that the Department of Defense spent $140 billion—or 27 percent of its base budget apart from the costs of operations in Iraq and Afghanistan—paying military personnel in 2012. CBO examines the budgetary implications of different approaches to compensating military personnel, including possible changes in the structure of cash pay, health benefits for military personnel and their family members, and health benefits for retirees. CBO also evaluates federal programs and issues related to veterans.
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S. 914, Veterans Programs Improvement Act of 2011

cost estimate

October 19, 2011

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CBO Testified on the Potential Costs of Health Care for Veterans of Recent and Ongoing U.S. Military Operations

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July 27, 2011


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Potential Costs of Health Care for Veterans of Recent and Ongoing U.S. Military Operations

report

July 27, 2011

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CBO's Economic Projections

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June 23, 2011


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An Analysis of the Navy's Fiscal Year 2012 Shipbuilding Plan

report

June 23, 2011


Abstract

Since 2006, the Congressional Budget Office (CBO) has performed an independent analysis of the Navy's latest shipbuilding plan at the request of the Subcommittee on Seapower and Expeditionary Forces of the House Armed Services Committee. This CBO study, the latest in that series, summarizes the ship inventory goals and purchases described in the Navy's 2012 plan and assesses their implications for the Navy's funding needs and ship inventories through 2041.


Highlights

Through 2011, at the direction of the Congress, the Department of the Navy issued annual reports that described its plans for ship construction over the coming 30 years. But in the Ike Skelton National Defense Authorization Act for Fiscal Year 2011 (Public Law 111-383), the Congress relieved the Navy of that requirement except when the Department of Defense submits the Quadrennial Defense Review. Instead, the report accompanying the legislation required the Navy to submit a 10‑year shipbuilding plan if requested by the appropriate oversight committees.

Consequently, for fiscal year 2012, the Navy's intentions for shipbuilding came out in stages, in documents that can be combined with one another and with the plan of the previous year to yield a new 30-year plan comparable to previous ones. In late February, the Navy provided briefing slides highlighting the major changes the service had made in the schedule for constructing new ships and retiring older ones during the next 10 years, as well as providing some information about the expected cost of the shipbuilding called for in the new schedule. In late May, at the request of the House Armed Services Committee, the Navy provided tables showing a 30-year schedule that made a number of adjustments to the schedule released one year earlier. CBO viewed those briefing slides and tables as reflecting a 2012 shipbuilding plan that represents a modification to the previous year's plan.

Although the total costs of carrying out the Navy's 2012 plan would be less than those for the 2011 plan, they would still be much higher than the funding levels that the Navy has received in recent years. Specifically:

  • The Navy's documents constituting its 2012 shipbuilding plan imply that the service's current goal for its inventory of battle force ships (aircraft carriers, submarines, surface combatants, amphibious warfare ships, and some logistics and support ships) is 328—up from 322 or 323 under the 2011 plan (that plan was unclear as to whether the inventory goal for carriers was 10 or 11) and 313 in the Navy's three previous long-term plans, which were based on its 2005 assessment of the desired force structure. The battle force fleet currently numbers 286 ships.
  • Under the 2012 plan, the Navy would buy a total of 275 ships over the 2012–2041 period: 205 combat ships and 70 logistics and support ships, including 5 for the Army. Given the rate at which the Navy plans to retire ships from the fleet, that construction plan is insufficient to achieve a 328-ship fleet.
  • In comparison, in the 2011 shipbuilding plan, the Navy envisioned buying 198 combat ships and 78 logistics and support ships between 2011 and 2040, for a total of 276. That plan was insufficient to achieve a fleet of 322 or 323 ships.
  • The Navy estimates that buying the new ships in the 2012 plan will cost an average of about $15.5 billion per year, or a total of $465 billion over 30 years (about 6 percent less than its estimate for the 2011 plan). Those figures are solely for the construction of new ships, the only type of costs reported in the Navy's 30-year shipbuilding plans. However, other activities typically funded from the Navy's budget accounts for ship construction—such as refueling nuclear-powered aircraft carriers and outfitting new ships with various small pieces of equipment after the ships have been built or delivered—will, in CBO's estimation, add nearly $2 billion to the Navy's average annual shipbuilding costs under the 2012 plan, which would bring the total to $17.3 billion per year on average.
  • Using its own models and assumptions, CBO estimates that the cost for new-ship construction under the 2012 plan will average about $18.0 billion per year, or a total of $539 billion through 2041. Including the expense of refueling aircraft carriers as well as outfitting new ships raises that average to about $19.8 billion per year, CBO estimates. Those figures are about 8 percent lower than CBO's estimates of the Navy's 2011 plan.
  • CBO's estimate of the costs for new-ship construction in the 2012 shipbuilding plan is about 16 percent higher than the Navy's estimate overall. That figure masks considerable variation over time, however: CBO's estimates are 7 percent higher than the Navy's for the first 10 years of the plan, 10 percent higher for the following decade, and 31 percent higher for the final 10 years of the plan. Those differences result partly from different estimating methods and different assumptions about the designs and capabilities of future ships. The differences also arise partly because CBO accounted for the fact that costs of labor and materials have traditionally grown faster in the shipbuilding industry than in the economy as a whole, whereas the Navy does not appear to have done so; that factor produces a widening gap between the estimates over time.
  • If the Navy receives the same amount of funding for ship construction in the next 30 years as it has over the past three decades, it will not be able to afford all of the purchases in the 2012 plan. CBO's estimate of the full cost of the Navy's 2012 shipbuilding plan is about 27 percent above the average funding of almost $16 billion per year (in 2011 dollars) that the Navy has received over the past three decades.


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CBO Testified on the Value of the Department of Defense's Annual 30-Year Shipbuilding and Aviation Plans

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June 1, 2011


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The Value of 30-Year Defense Procurement Plans for Congressional Oversight and Decisionmaking

report

June 1, 2011

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Linking the Readiness of the Armed Forces to DoD's Operation and Maintenance Spending

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April 25, 2011


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Linking the Readiness of the Armed Forces to DoD's Operation and Maintenance Spending

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April 25, 2011

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Abstract

Spending for operation and maintenance (O&M) supports the military services' day-to-day activities, such as training military units, maintaining equipment, recruiting service members, operating military bases, and providing administrative services. DoD typically cites the readiness of military units to perform their missions in wartime as the primary justification for its O&M budget requests to the Congress. DoD, however, has not been able to clearly identify the relationship between the department's O&M spending and the readiness of military units. Nor has the Congressional Budget Office's (CBO's) analysis—which used historical data to attempt to establish statistical relationships between O&M spending and readiness for selected units—yielded a well-defined linkage. Those efforts were not fruitful, largely because the information needed to determine that linkage—effective measures of readiness and detailed data on spending—is not readily available or may not, in fact, exist.


Highlights

Spending for operation and maintenance (O&M) supports the military services' day-to-day activities, such as the training of military units, maintenance of equipment, recruitment of service members, operations of military bases, and provision of administrative services. In 2010, appropriations for O&M (excluding funds for the Defense Health Program) totaled $157 billion and constituted some 29 percent of the Department of Defense's (DoD's) "base" budget.

DoD typically cites the readiness of military units to perform their missions in wartime as the primary justification for its O&M budget requests to the Congress. For example, budget materials that the Army submitted with its 2012 request for O&M funding state the following: "The budget provides resources to train and sustain the active component combat forces at readiness levels consistent with mission requirements. . . ." The Navy in part justified its 2012 O&M request with this statement: "Our top readiness priority is ensuring that forces are fully trained, ready to deploy, and fully supported while deployed. The budget reflects the best balance of resources to achieve this priority."

DoD broadly defines "readiness" as the ability of U.S. military forces to fight and meet the demands of the National Military Strategy (which describes the armed forces' role in achieving national security objectives). DoD assesses readiness on at least two levels—the unit level and the joint level. "Unit readiness" is the ability of units such as Army brigades, Marine Corps regiments, Navy ships, and Air Force squadrons to perform their designated missions. "Joint readiness" refers to a commander's ability to execute missions with units from more than one service.

DoD, however, has not been able to clearly identify the relationship between the department's O&M spending and the readiness of military units. Nor has the Congressional Budget Office's (CBO's) analysis—which used historical data to attempt to establish statistical relationships between O&M spending and readiness for selected units—yielded a well-defined linkage. (CBO's analysis focused only on unit readiness because of the role it plays in DoD's assessments of the services' need for O&M funding.) Those efforts were not fruitful, largely because the information needed to determine that linkage—effective measures of readiness and detailed data on spending—is not readily available or may not, in fact, exist. The military's current measures of readiness are not readily applicable to such analyses, and there are some concerns about the quality of its assessments of readiness.

Yet even if readiness were well measured, determining the relationship between readiness and O&M spending presents challenges. Some activities supported by O&M spending may be more directly related to a unit's current readiness than other such activities are; in addition, some spending from other types of appropriations may affect readiness. Also, spending intended to support units' readiness activities must be distinguished from spending for overseas contingency operations (for example, in Iraq and Afghanistan). If DoD is to determine how O&M spending affects units' readiness, it may have to conduct controlled experiments in which it methodically varies readiness-related spending for otherwise similar units.



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Military Retirement - March 2011 Baseline

data or technical information

March 18, 2011

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