Officials Say Navy's Shipbuilding Plan Underfunded

KAISERSLAUTERN, Germany — The Navy's most recent 30-year construction plan underestimates the cost of growing and maintaining its fleet by more than $3 billion annually over the next three decades, according to a recent analysis by the non-partisan Congressional Budget Office.

According to the report, the Navy faces a $94 billion funding gap from 2013 through 2042 as it looks to build roughly 268 ships for its aging inventory.

The potential budget shortfall represents the latest financial hurdle for the Navy, which according to its own figures, expects to see its budget cut by $1.4 billion, to $156 billion, in the coming fiscal year. As a result, the Navy has sharply reduced its shipbuilding expectations.

In its 2012 construction estimate, the service planned to expand to 328 ships in 30 years. Its latest goal is roughly 310 ships. The Navy's battle force fleet currently numbers 286 ships.

Navy officials said it can be difficult to accurately calculate how much a ship will cost in 20 years, but declined to specifically address the projected $94 billion budget gap.

"The Navy's confidence in our cost estimates … is extremely high," according to a statement by Sean Stackley, assistant secretary of the Navy for research development and acquisition, and Vice Adm. John Blake, deputy chief of naval operations, integration of capabilities and resources, released last week in response to the CBO report.

The Navy's latest 30-year shipbuilding plan submitted to Congress in late March determined the new fleet would cost an average of $16.8 billion annually for a total of $505 billion, a 5 percent increase from the Navy's 2012 ship construction plan.

But the CBO report concluded the ships would cost roughly $20 billion each year. It's unlikely the Navy will receive enough extra dollars to close that gap based on recent budget allocations, according to the CBO report.

The Navy estimates new vessels will cost an average of $1.9 billion, while the CBO's cost per ship estimate is $2.2 billion. The CBO predicts labor and material costs will continue to rise, while the Navy's budget plan assumes a ship that cost $2.5 billion to build in 2012 would cost the same in 2030 or 2040, the report concludes.

Navy officials said late Friday that the service's estimates are based on previous shipbuilding inflation rates.

It's not unusual for the CBO to come up with higher budget totals than the government agencies it reviews. Last year, the CBO estimated the Navy's 2012 shipbuilding plan fell short by $76 billion.

Rear Adm. Joseph Mulloy, a Navy budget official, said during a briefing earlier this year that the service will not be able to expand as rapidly as it would like.

"We have a leaner, smaller force, but we are still rapidly deployable and expeditionary," Mulloy said at the time.

The Navy has received an average of $16 billion annually for shipbuilding, according to the CBO.