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Tuesday, August 20, 2013

Navy Virginia (SSN-774) Class Attack Submarine Procurement: Background and Issues for Congress

Ronald O'Rourke
Specialist in Naval Affairs

The Navy has been procuring Virginia (SSN-774) class nuclear-powered attack submarines since FY1998. The two Virginia-class boats requested for FY2014 are to be the 19
th and 20th boats in the class, and the first two in a 10-boat Virginia class multiyear-procurement (MYP) contract for the period FY2014-FY2018. Congress granted authority for this MYP contract as part of its action on the FY2013 Department of Defense (DOD) budget. The Navy’s FY2013 budget submission had projected one Virginia-class boat in FY2014. Congress, as part of its action on the FY2013 DOD budget, added AP funding in FY2013 to support the procurement of a second Virginia-class boat in FY2014. The Navy’s inclusion of a second Virginia-class boat in FY2014 (which increases from 9 to 10 the number of boats in the FY2014-FY2018 MYP contract) follows through on this congressional action.

The Navy’s proposed FY2014 budget estimates the combined procurement cost of the two boats requested for FY2014 at $5,414.2 million. The two boats have received a total of $1,530.8 million in prior-year advance procurement (AP) funding (although this figure may be reduced by the March 1, 2013, sequester), leaving another $3,883.4 million to complete the funding for the two boats.

The Navy’s proposed FY2014 budget requests $5,285.3 million in procurement and AP funding for the Virginia class program. This figure includes:

• $2,930.7 million in procurement funding to complete the procurement cost of the first boat requested for FY2014, and to pay part of the procurement cost of the second boat requested for FY2014;

• $1,612.0 million in AP funding for Virginia-class boats to be procured in future fiscal years; and

• $742.6 million in AP funding for Economic Order Quantity (EOQ) purchases (i.e., batch orders) of selected components of the 10 Virginia-class boats to be procured under the FY2014-FY2018 MYP contract. EOQ purchases are a regular feature of the first year or two or an MYP contract.

The Navy is proposing to defer to FY2015 the remaining $952.7 million of the procurement cost of the second boat requested for FY2014. This would divide the procurement funding for the boat between two fiscal years (FY2014 and FY2015)—a funding profile sometimes called split funding. In recent instances where split funding has been used to fund Navy ships, the funding has been appropriated using a funding method called incremental funding, under which Congress takes a positive action to approve each of the two annual funding increments. For the second Virginia-class boat requested for FY2014, however, the Navy is proposing to use a different funding method called advance appropriations, which is a form of full funding that resembles a legislatively locked in form of incremental funding. Under advance appropriations (which is not to be confused with advance procurement [AP] funding), the FY2015 funding increment for the boat would be legislatively locked into place (i.e., it would be “automatic”), and Congress would need to take action to stop that increment from being appropriated. Although the Navy in recent years has occasionally expressed interest in using advance appropriations for funding ships, there is little precedent in recent years for funding Navy ships with advance appropriations.

DOD and the Navy are considering whether to build Virginia-class boats procured in FY2019 and subsequent years with an additional mid-body section, called the Virginia Payload Module
(VPM), that contains four large-diameter, vertical launch tubes that the boats would use to store and fire additional Tomahawk cruise missiles or other payloads, such as large-diameter unmanned underwater vehicles (UUVs). Building Virginia-class boats with the VPM might increase their unit procurement costs by about 15%-20%, and would increase the total number of torpedo-sized weapons (such as Tomahawks) that they could carry by about 76%.

The Navy’s FY2013 30-year SSN procurement plan, if implemented, would not be sufficient to maintain a force of 48 SSNs consistently over the long run. The Navy projects under that plan that the SSN force would fall below 48 boats starting in FY2022, reach a minimum of 43 boats in FY2028-FY2030, and remain below 48 boats through FY2034.

Potential issues for Congress regarding the Virginia-class program include the following:

• the impact on the Virginia-class program of the March 1, 2013, sequester on FY2013 funding and unobligated prior-year funding for the program;

• the potential impact on the Virginia-class program of a possible sequester later this year or early next year on FY2014 funding and unobligated prior-year funding for the program;

• whether to use traditional (i.e., single-year) full funding, incremental funding, or (as the Navy proposes) advance appropriations for funding the second of the two boats requested for procurement in FY2014;

• the Virginia-class procurement rate more generally in coming years, particularly in the context of an SSN shortfall projected for FY2025-FY2034 and the larger debate over future U.S. defense strategy and defense spending; and

• Virginia-class program issues raised in a December 2012 report from DOD’s Director, Operational Test and Evaluation (DOT&E).

The Navy’s Ohio Replacement (SSBN[X]) ballistic missile submarine program is discussed in CRS Report R41129, Navy Ohio Replacement (SSBN[X]) Ballistic Missile Submarine Program: Background and Issues for Congress, by Ronald O'Rourke.

Date of Report: August 6, 2013
Number of Pages: 30
Order Number: RL32418
Price: $29.95

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