Congressional Budget Office January 6, 2016 2016 Outlook for Navy Shipbuilding Presentation at the 2016 Defense Outlook Forum Eric J. Labs Senior Analyst for Naval Forces and Weapons This presentation presents data from and includes other information published in CBO's An Analysis of the Navy’s Fiscal Year 2016 Shipbuilding Plan (October 2015), www.cbo.gov/publication/50926.
Outline ■ The Navy’s 2016 shipbuilding plan ■ CBO’s estimate of the cost of the 2016 plan ■ The problem of lead ships ■ A larger fleet or not? ■ A fleet that conforms with historical funding – Potential impact of the Ohio Replacement Program 1 CONGRESSIONAL BUDGET OFFICE
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Ship Purchases Under the Navy’s 2016 Plan and Recent Actions by the Congress and the Department of Defense (DoD) Plan Actions by the Plan Actions by the Ship Type 2016–2020 Congress and DoD 2016–2025 Congress and DoD Aircraft Carriers 1 1 2 2 Ballistic Missile Submarines 1 1 2 2 Attack Submarines 10 10 18 18 Destroyers 10 11 20 21 Littoral Combat Ships and Guided Missile Frigates 14 6 29 17 Amphibious Ships 3 3 8 8 Other Support Ships 10 11–12 24 25–26 __________ __________________ __________ __________________ Total 48 43–44 103 93–94 Congressional action in fiscal year 2016: Added 4 ships in 2016 (some may have been brought forward from future years). DoD plans to buy 12 fewer littoral combat ships starting in 2017. 3 CONGRESSIONAL BUDGET OFFICE
The Navy’s Estimates of the Average Annual Costs of New-Ship Construction Under Its 2015 and 2016 Plans Billions of 2015 Dollars 30 25 Navy's Estimate, Average Annual Funding, Navy's 2015 Plan 20 1986 to 2015 Estimate, 2016 Plan 15 10 5 0 2016 to 2025 2026 to 2035 2036 to 2045 30-Year Average 4 CONGRESSIONAL BUDGET OFFICE
The Navy’s Estimates for New-Ship Construction, 2016 to 2025 Billions of 2015 Dollars Average for 25 Second Five Years Historical Congressional ($18.9 billion) Average Appropriation Average for ($13.9 billion) Above the First Five Years 20 President's ($14.9 billion) Request 15 10 5 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 5 CONGRESSIONAL BUDGET OFFICE
Requested and Appropriated Shipbuilding Budgets Under the Budget Control Act Billions of 2015 Dollars 20 President's Appropriated Request Funds 15 10 5 0 2012 2013 2014 2015 2016 The white dashed line indicates the estimated shipbuilding budget, calculated as the historical share of the Department of Defense’s base budget under the BCA, as that act stood at the time of each year’s budget submission. 6 CONGRESSIONAL BUDGET OFFICE
Average Annual Shipbuilding Costs Under the Navy’s Plan, by Decade Near Term Midterm Far Term 30-Year Average (2016–2025) (2026–2035) (2036–2045) (2016–2045) Navy Estimates (Billions of 2015 Dollars) New Ship Construction 16.9 17.2 15.2 16.5 Plus Carrier Refuelings 18.3 18.2 15.9 17.5 Plus All Other Items 19.5 18.8 16.5 18.3 CBO Estimates (Billions of 2015 Dollars) New Ship Construction 18.2 19.2 17.8 18.4 Plus Carrier Refuelings 19.6 20.2 18.4 19.4 Plus All Other Items 20.7 20.8 19.0 20.2 Percentage Difference New Ship Construction 8 12 17 12 Plus Carrier Refuelings 7 11 16 11 Plus All Other Items 6 11 16 10 7 CONGRESSIONAL BUDGET OFFICE
Cost Growth in Lead Ships, 1985 to 2015 Percent 8 CONGRESSIONAL BUDGET OFFICE
Short- and Long-Term Challenges to Increasing the Size of the Fleet ■ Budget Control Act ■ Broad federal fiscal environment ■ Debate on amount of defense spending ■ High deployment rates may wear ships out faster ■ Renewed focus on Europe may reduce emphasis on naval forces 9 CONGRESSIONAL BUDGET OFFICE
Short- and Long-term Factors Favoring a Larger Fleet ■ Construction momentum ■ Rising tensions in the Asia-Pacific region ■ Congress has been increasing shipbuilding budgets 10 CONGRESSIONAL BUDGET OFFICE
The Impact of the Ohio Replacement Program on Navy Shipbuilding Billions of 2015 Dollars Historical average for Navy shipbuilding includes new ship construction, refueling of aircraft carriers, ship conversions, outfitting and postdelivery costs, and other items. 11 CONGRESSIONAL BUDGET OFFICE
CBO’s Estimates of Annual Shipbuilding Costs Under the Navy’s 2016 Plan Billions of 2015 Dollars 30 Actual Under the Aircraft Carriers and Combat Navy's Plan Carrier Refuelings Logistics and Average Support Ships 25 Amphibious Annual Warfare Funding, Small Surface Other Ships 1986 to 2015 Combatants 20 Items 15 10 Large Surface Combatants 5 SSBNs SSNs 0 2010 2015 2020 2025 2030 2035 2040 2045 12 CONGRESSIONAL BUDGET OFFICE
A Fleet that Conforms With Historical Funding Levels Purchases Inventory in 2045 Ship Navy’s Plan Historical Funding Navy’s Plan Historical Funding Aircraft Carriers 6 6 10 10 Ballistic Missile Submarines 12 12 12 12 Attack Submarines 45 34 50 37 Destroyers 65 46 82 64 Littoral Combat Ships 67 44 57 34 Amphibious Warfare Ships 23 15 33 27 Support Ships 46 35 61 53 ______________ ______________ ______________ ______________ Total 264 192 305 237 13 CONGRESSIONAL BUDGET OFFICE
Definitions AOE = fast combat support ship CVN = nuclear-powered aircraft carrier DDG = guided missile destroyer JHSV = joint high speed vessel LCS = littoral combat ship LHA = amphibious assault ship LPD = amphibious transport dock MHC = coastal mine hunter MLP = mobile landing platform SSBN = ballistic missile submarine SSN = attack submarine T-AKE = ammunition cargo ship 14 CONGRESSIONAL BUDGET OFFICE
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