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Friday, October 25, 2013

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

Ronald O'Rourke
Specialist in Naval Affairs

The Navy’s proposed FY2014 budget requests funding for the procurement of 8 new battle force ships (i.e., ships that count against the Navy’s goal for achieving and maintaining a fleet of 306 ships). The 8 ships include two Virginia-class attack submarines, one DDG-51 class Aegis destroyer, four Littoral Combat Ships (LCSs), and one Mobile Landing Platform/Afloat Forward Staging Base (MLP/AFSB) ship. The Navy’s proposed FY2014-FY2018 five-year shipbuilding plan includes a total of 41 ships—the same number as in the Navy’s FY213-FY2017 five-year shipbuilding plan, and one less than the 42 ships that the Navy planned for FY2014-FY2018 under the FY2013 budget submission.

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. The Navy’s FY2014 30-year (FY2014-FY2043) shipbuilding plan, like the Navy’s previous 30-year shipbuilding plans in recent years, 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 306 ships during most of the 30-year period, and experience shortfalls at various points in cruisers-destroyers, attack submarines, and amphibious ships.

In its October 2013 report on the cost of the FY2014 30-year shipbuilding plan, the Congressional Budget Office (CBO) estimates that the plan would cost an average of $19.3 billion per year in constant FY2013 dollars to implement, or about 15% more than the Navy estimates. CBO’s estimate is about 6% higher than the Navy’s estimate for the first 10 years of the plan, about 14% higher than the Navy’s estimate for the second 10 years of the plan, and about 26% 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.

Proposed issues for Congress in reviewing the Navy’s proposed FY2014 shipbuilding budget, its proposed FY2014-FY2018 five-year shipbuilding plan, and its FY2014 30-year (FY2014- FY2043) shipbuilding plan include the following:
• the impact on Navy shipbuilding programs of the March 1, 2013, sequester on FY2013 funding and unobligated prior-year funding;

• the potential impact on Navy shipbuilding programs of a possible sequester later this year or early next year on FY2014 funding and unobligated prior-year funding;

• the potential impact on the size of the Navy of reducing DOD spending (through sequestration or regular appropriations activity) in FY2013-FY2021 to levels at or near the lower caps established in the Budget Control Act of 2011;

• the future size and structure of the Navy in light of strategic and budgetary changes;

• the sufficiency of the 30-year shipbuilding plan for achieving the Navy’s goal for a 306-ship fleet; and

• the affordability of the 30-year shipbuilding plan.
Funding levels and legislative activity on individual Navy shipbuilding programs are tracked in detail in other CRS reports.

Date of Report: October 18, 2013
Number of Pages: 79
Order Number: RL32665
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