In December 2016, the Navy released a new force structure assessment that called for building a 355-ship fleet. CBO estimates that construction costs for a fleet of 355 ships would average $26.6 billion (in 2017 dollars) per year over the next 30 years, which is 60 percent more than what the Navy has spent on average over the past 30 years. A larger fleet will also lead to greater operation and support costs. Presentation by Eric Labs, CBO’s Senior Analyst for Naval Forces and Weapons, at the Bank of America Merrill Lynch Defense Outlook Forum.

1. Congressional Budget Office
Presentation at the Bank of America Merrill Lynch
Defense Outlook Forum
January 10, 2018
Eric J. Labs
Senior Analyst for Naval Forces and Weapons,
National Security Division
The 2018 Outlook
for Navy Shipbuilding

2. 1
CBO
 Costs and effects of building a 355-ship navy
– How fast can it be built with new construction?
– How much will it cost to build?
– How much will it cost to operate?
 Implications for the shipbuilding industrial base
 Recent shipbuilding budgets
 Can service life extensions or reactivating retired ships help?
Outline

3. 2
CBO
Composition of the Fleet by Ship Type, Historically
and Under Recent Force Structure Assessments
FSA = force structure assessment.
Percent

4. 3
CBO
Annual Inventory of Battle Force Ships Under
Different Timelines
Ships

5. 4
CBO
Average Annual Ship Purchases and Shipbuilding
Costs Under Different Timelines

6. 5
CBO
Number of Sailors Required to Crew a 355-Ship
Fleet

7. 6
CBO
Annual Direct Operating Costs of a 355-Ship Fleet

8. 7
CBO
O&S = operation and support.
Average Annual Total Costs for a 355-Ship Fleet
Billions of dollars

9. 8
CBO
 Seven shipyards
– Bath Iron Works
– NASSCO
– Electric Boat
– Newport News
 Shipbuilding rates are projected to increase from 8.3 per year over the
past decade to 12 to 15 per year over the next 10 years
 That would increase the workforce 40 percent across the yards over the
next 5 to 10 years under the most demanding timelines
 Up to $4 billion in infrastructure would be invested
Implications for the Shipbuilding Industrial Base
Seven shipyards
– Ingalls Shipbuilding
– Austal USA
– Fincantieri Marinette Marine

10. 9
CBO
0
5
10
15
20
25
2012 2013 2014 2015 2016 2017
Billions of Dollars
President's Request Appropriated Funds
Requested and Appropriated Shipbuilding
Budgets, 2012 to 2017
On average, the
Congress appropriated
$1.8 billion per year
more than the
President requested.

11. 10
CBO
 Relax force structure requirements
 Use Service Life Extension Programs (SLEPs) for some cruisers,
destroyers, amphibious warfare ships, and logistics ships
– Improve hull, mechanical, and electrical systems for additional
service life of five to ten years
– Upgrade combat systems—particularly for cruisers and destroyers—
to be effective in future combat environments
 No reactivations of retired ships
Can the Navy Get 355 Ships Faster?

12. 11
CBO
20-Year Buildup With SLEP
20-Year Buildup
250
275
300
325
350
375
400
2017 2022 2027 2032 2037 2042 2047
Ships
Annual Inventory of Battle Force Ships With SLEP
Alternative