CBO Estimates That the Navy’s Latest 30-Year Shipbuilding Plan Will Cost More Than the Navy Estimates

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July 25, 2012

Congress requires the Navy to issue an annual report that describes its plan for building new ships over the next 30 years. CBO has prepared a report—required under the National Defense Authorization Act for Fiscal Year 2012—analyzing the Navy’s latest long-term shipbuilding plan, which covers fiscal years 2013 to 2042.

In its 2013 shipbuilding plan, the Navy envisions buying a total of 268 ships during the next 30 years at an average annual cost of $16.8 billion (all figures are in 2012 dollars), totaling $505 billion over 30 years. Those figures are solely for the construction of new ships, the only type of cost reported in the Navy’s long-term plans. Adding in the cost of other activities typically funded from the Navy’s budget accounts for shipbuilding, which include refueling of nuclear-powered aircraft carriers and other items, yields an average cost of $18.8 billion per year.

By comparison, using its own models and assumptions, CBO estimates that the cost for new-ship construction under the 2013 plan would average $20.0 billion per year, or a total of $599 billion through 2042. That figure is 19 percent more than the Navy’s estimate. Including the expense of refueling aircraft carriers and the other items raises that average cost to about $22 billion per year—37 percent more than what the Navy has spent through its shipbuilding accounts on average during the past 30 years.

The 2013 plan contains some significant changes in the Navy’s long-term goals for shipbuilding. Those changes include reducing the goal for the inventory of ships, reducing the number of ships to be purchased, and altering the composition of ships to be purchased (such as buying fewer less-expensive support ships and more high-end combat ships).

This report was prepared by Eric Labs of CBO’s National Security Division.