The Navy's recently released 2015 30-year shipbuilding plan says the service is in danger of not realizing its anticipated vision for a fleet size of more than 300 ships and submarines because there simply is not enough money available to meet stated requirements.
The planned pace of retirement for many of the surface ships built between 1980 and 1990 and the funding needed to secure production in 2021 for the first next-generation ballistic missile submarine, the Ohio Replacement program, are placing extensive strain on available resources, according to the plan.
Navy acquisition executive Sean Stackley recently told Congress that the shipbuilding plan seeks to correctly identify this problem.
"In order to meet our 306 ship requirements, the funding that's needed greatly exceeds what we have had for the past 20 years," he said. "We're identifying this problem years in advance so that we collectively have the opportunity to work on it. The 306-ship plan is under great budget stress."
The plan, called the "Report to Congress on the Annual Long-Range Plan for Construction of Naval Vessels for FY2015," breaks down required funding for future ships into three ten-year blocks and specifies that the Navy will need $19.7 billion per year for shipbuilding from 2025 through 2034 due to the expected production of the Ohio Replacement Program, or ORP.
Production for the lead ship in a planned fleet of 12 ORPs is expected to cost $12.4 billion -- $4.8 billion in non-recurring engineering or development costs and $7.6 billion in ship construction, the plan states. Detailed design for the first ORP is slated for 2017 and some development and early construction is already underway. The Ohio Replacement Program is scheduled to serve out through the 2080s.
"If the DON [Department of the Navy] is unable to sustain the average annual shipbuilding budgets of $19.7 billion over the course of the mid-term planning period, which is unlikely to be the case, the battle force will fall short of meeting requirements," the plan states.
The ORP, now being engineered with a host of new technologies, is designed to replace the existing Ohio-class ballistic missile submarines and provide global undersea strategic nuclear deterrence. At the moment, there isn't enough money to support this priority, according to the shipbuilding plan.
"The average cost of this plan during the period which the DON is procuring OR SSBN (Ohio Replacement) cannot be accommodated by the Navy from existing resources," the plan states.
Some influential members of Congress such as House Armed Services Committee Seapower and Projection Forces subcommittee chairman Rep. Randy Forbes, R-Virginia, have long been concerned about discrepancies between the dollars needed for the service's shipbuilding plan and the actual dollars spent.
"The 30-year shipbuilding plan normally has had a shortfall in it, as much as four to six billion per year, between what the average amount the Navy has had over the last couple of decades and what it is going to take to do the ship-building plan that they are showing us," he told Military.com in an interview.
The congressman advocates several possible avenues for making more shipbuilding funding available, such as increasing the budget or shifting priorities within DoD accounts.
"At some point in time, we need a realistic shipbuilding plan where we come together and say, 'How do we get the dollars to build the ships the Navy is going to need to defend and protect this country for the next ten to twenty years or longer?'" Forbes said.
If money for the Ohio-replacement is taken from the existing shipbuilding budget and not placed in stand-alone funding stream, then remaining shipbuilding efforts will be severely compromised, he said.
"If we do the Ohio-class -- which we are going to have to do --it is going suck out everything else for shipbuilding and it will significantly impact our industrial base," he explained. "Do you bring funding in from other non-DoD funds? You may have to look within DoD and say what are our priorities? One to one-and-a-half percent of the DoD budget can build the ships we need for the next several decades."
The Navy's shipbuilding road map appears to agree with this assessment, stating that the service will only be able to afford ORP procurement costs with significant increases in the budget top-line to fund the submarine, without reducing other resourcing levels.
At the same time, the Navy claims it is making progress with efforts to lower costs for the Ohio Replacement Program.
"A top priority outlined in our plan includes Ohio Class submarine replacement which will continue to provide strategic nuclear deterrence," Navy spokesman Lt. Robert Myers said. "While our current fiscal environment provides resourcing challenges for the proposed ship building plan, we continue to work with Congress on a way forward and are committed to identifying cost savings for the Ohio Replacement without sacrificing required capability."
In particular, the ORP program has recognized savings of $800 million to the submarines non-recurring engineering costs, according to a blog post from Rear Adm. Joseph Tofalo, director of undersea warfare. Additional cost savings are being achieved by re-using the Trident II D5 missiles and technologies developed for the Virginia-class attack submarines, Tofalo wrote.
Tofalo also added that the Navy has identified a 12-ship class cost reduction of $500 million in construction and $130 million in operation and sustainment costs.
Overall, the Navy needs to make more progress if it hopes to meet its goal of producing the Ohio Replacement Submarines for $4.9 billion each in 2010 dollars.
Working with ORP-builder Electric Boat, a subsidiary of General Dynamics Corp., the Navy has finished the ship specifications for the boat and made progress with a few cost-cutting initiatives.
The Navy is only building 12 Ohio Replacement submarines to replace 14 existing ones because the new submarines are being built with an improved nuclear core reactor that will better sustain the submarines, officials have said. As a result, the Ohio Replacement submarines will be able to perform a greater number of deployments than the ships they are replacing and not need a mid-life refueling in order to complete 42 years of service.
Also, Navy officials point to a “bankers score card” which catalogs every cost-saving measure identified in the Ohio Replacement program development. The program looks for savings in construction, saving in operation and support and design savings.
For instance, Ohio Replacement program developers saved millions in developmental costs by removing a technology called Salvage Air, a mechanism to bring air into the tank in the event of catastrophe or disaster, service officials said.
On average, the Navy says it will need $16.7 billion per year for the next three decades to reach its goal of 306 ships. Beginning fiscal year 2020, the service will need about $17.2 billion per year for shipbuilding, an amount that is about $4 billion more than the Navy’s historical average annual investment of $13 billion per year, service officials said.
This goal is also complicated by the fact that most of the ships in the fleet were built between 1980 and 1990 at a rate of three or four per year and they'll likely reach the end of their service life around the same time. In short, surface ships and submarines will retire at a faster rate than they can be replaced.
"These retiring ships will need to be recapitalized at rates that are unaffordable in today’s environment," according to the shipbuilding plan. "This phenomenon leads to a requirement to increase shipbuilding funding over historic levels. Only with additional funding in 2020 and beyond will we mitigate the impact of these requirements."
Addressing this issue is a key part of why the Navy plans to lay up one-half of its fleet of Ticonderoga-class cruisers for a period of years to work on maintenance and modernization before returning them to service.