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Carrier Construction Costs Jump 15 Percent

Last week we wrote up an unpublished paper from the influential Center for Naval Analyses warning the Navy that it faces a critical tipping point where the “demand signal” from overseas combatant commanders will soon exceed the number of ships. Dismal federal budget forecasts only compound the squeeze on Navy budgets from rising personnel and operating costs and the skyrocketing price tag for new ships; the resulting downward pressure on shipbuilding budgets will see the fleet decline from today’s 286 ships to around 230-240 ships by 2025.

Hard numbers showing how bleak things look for shipbuilding can be found in the Pentagon’s April Selected Acquisition Reports, released last week, providing details on weapon’s cost and schedule changes.

The cost to build three Gerald Ford class carriers has jumped from $35 billion to $40 billion, a 15 percent increase, since September 2008. Production costs for three DDG 1000, call them technology demonstration ships, jumped by 86 percent; although this was largely due to cutting the buy from 10 ships to 3. Littoral Combat Ship program costs rose by $883 million, a 31 percent increase (speaking of the LCS, Defense Tech friend Paul McLeary has some good shots of the Independence).

The CNA paper said annual buys of around 6 or 7 ships per year, the average over the past ten years, is not enough to arrest the decline in fleet size. The Navy projects a build of 9 to 10 ships per year over the next five years, mostly smaller, supposed to be cheaper ships like LCS and the Joint High Speed Vessel. How the Navy sticks to that plan as shipbuilding costs continue to rise is difficult to see.

-- Greg

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