Navy’s future fleet’s price tag grows 5-10%, despite ship mix not changing: CBO

WASHINGTON — A new independent analysis of the Navy’s long-range shipbuilding plan indicates the projected price of the service’s future fleet will be 5 to 10 percent higher than the same watchdog’s previous estimates, despite the mix of ships remaining mostly the same, with the prime culprit the rising price of producing submarines.

Those conclusions come from the non-partisan Congressional Budget Office, which today published its analysis of the Navy’s 30-year shipbuilding plan, a routine assessment mandated by lawmakers. The agency on Wednesday also published a broader assessment of the Pentagon’s 2024 future years defense program.

As it did in 2023, the Navy this year submitted three different profiles for its future fleet. The first two options are based around flat or declining defense budgets, while the third option assumes a growing shipbuilding account. While the service’s current fleet size is roughly 290, the Navy’s first plan would result in a fleet of 319 ships by 2053; the second in a fleet of 328 vessels; and the third in 367 ships.

The watchdog concluded that the least expensive of the three plans would cost $906 billion over a 30-year period, while the most expensive would be $979 billion over three decades. The Navy meanwhile generated cost estimates between $776 billion and $842 billion.

By comparison, CBO’s estimates for the fiscal year 2023 plan ranged between $825 billion and $908 billion, while the Navy’s were between $710 billion and $786 billion.

CBO found that although the mix of ships presented in the fiscal year 2024 plans mostly mirror that of 2023, the overall price of the fleet increased, driven largely by “higher estimated costs for submarines.”

“The growth reflected in the Navy’s and CBO’s estimates for the 2024 plan is mainly attributable to an increase in the estimated costs of many shipbuilding programs — especially submarine programs — and not to an increase in the number of ships,” according to the government watchdog’s report.

CBO also attributed the increases to factors such as some ships taking longer and proving more difficult to build than the Navy anticipated; ship designs being more complicated than expected; and certain cost estimates in previous plans being “unrealistically low.”

Historically, the Navy and CBO almost always disagree on the projected price of future ships — with the service producing much more optimistic figures — because the two agencies make different assumptions about a variety of factors that impact the bottom line, such as the cost of labor and materials or what capabilities a new vessel might possess. Additionally, shipbuilding cost estimates become less reliable as auditors project further into the future which in turn magnifies the differences in each agency’s assumptions.

Despite the Navy saying first two plans don’t assume rising defense budgets, CBO also concluded that even to build the smallest of the three fleets, the service will need a substantial increase in congressional appropriations, ranging between 31% and 40% over the next three decades depending on which plan is pursued.

“Even if the Navy received the same amount of annual funding (in constant dollars) for shipbuilding from 2024 to 2053 that it has received, on average, over the past five years — a half-decade that saw the highest level of such funding since the 1980s — the service still could not afford any of the three alternatives in its 2024 shipbuilding plan,” according to CBO.