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Friday, February 22, 2013

Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress

Ronald O'Rourke
Specialist in Naval Affairs

The planned size of the Navy, the rate of Navy ship procurement, and the prospective affordability of the Navy’s shipbuilding plans have been matters of concern for the congressional defense committees for the past several years. In January 2013, the Navy presented to Congress a goal of achieving and maintaining a fleet of 306 ships, consisting of certain types and quantities of ships. The Navy’s proposed FY2013 budget requests funding for the procurement of 10 new battle force ships (i.e., ships that count against the 306 ship goal). The 10 ships include one Gerald R. Ford (CVN-78) class aircraft carrier, two Virginia-class attack submarines, two DDG- 51 class Aegis destroyers, four Littoral Combat Ships (LCSs), and one Joint High Speed Vessel (JHSV). These ships are all funded through the Shipbuilding and Conversion, Navy (SCN) account.

The FY2013-FY2017 five-year shipbuilding plan contains a total of 41 ships—14 ships, or about 25%, less than the 55 ships in the FY2012 five-year (FY2012-FY2016) shipbuilding plan, and 16 ships, or about 28%, less than the 57 ships that were planned for FY2013-FY2017 under the FY2012 budget. Of the 16 ships no longer planned for FY2013-FY2017, 9 were eliminated from the Navy’s shipbuilding plan and 7 were deferred to years beyond FY2017. The Navy’s proposed FY2013 budget also proposes the early retirement of seven Aegis cruisers and the placement into Reduced Operating Status (ROS) of two LSD-type amphibious ships.

The Navy’s FY2013 30-year (FY2013-FY2042) shipbuilding plan, which was submitted to Congress on March 28, 2012 (more than a month after the submission of the FY2013 budget on February 13, 2012), does not include enough ships to fully support all elements of the Navy’s 306 ship goal over the long run. The Navy projects that the fleet would remain below 310 ships during most of the 30-year period, and experience shortfalls at various points in cruisers-destroyers, attack submarines, and amphibious ships.

In its July 2012 report on the cost of the FY2013 30-year shipbuilding plan, the Congressional Budget Office (CBO) estimates that the plan would cost an average of $20.0 billion per year in constant FY2012 dollars to implement, or about 19% more than the Navy estimates. CBO’s estimate is about 11% higher than the Navy’s estimate for the first 10 years of the plan, about 13% higher than the Navy’s estimate for the second 10 years of the plan, and about 33% higher than the Navy’s estimate for the final 10 years of the plan. Some of the difference between CBO’s estimate and the Navy’s estimate, particularly in the latter years of the plan, is due to a difference between CBO and the Navy in how to treat inflation in Navy shipbuilding.

Navy officials state that although there is much current focus on the potential impacts on the military services of a sequestration of FY2013 DOD funding, the Navy is equally (if not more) concerned about the potential impact on the Navy of an extension of the current continuing resolution, or CR (H.J.Res. 117/P.L. 112-175 of September 28, 2012), through the end of the fiscal year. Shipbuilding and related programs that could experience execution problems under a year-long CR include the CVN-78 aircraft carrier program, the CVN Refueling Complex Overhaul (RCOH) program, the DDG-51 program, and two amphibious ships funded in prior years. A sequester on FY2013 DOD funding could cause additional program-execution problems in Navy shipbuilding programs.

Date of Report: February 8, 2013
Number of Pages: 84
Order Number: RL32665
Price: $29.95

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