Navy's 355-Ship Fleet Goal Would Cost $25 Billion Per Year

A new analysis from the Congressional Budget Office finds the Navy would have to spend $25 billion a year for 30 years to reach its stated goal of a 355-ship fleet, $6 billion a year more than if it stayed on its current track for a 308-ship fleet.

The report, released this month, assessed the costs of the service's 2017 30-year shipbuilding plan, finding the Navy would need to spend $566 billion to build a fleet of 308 ships, up from the current 274. But the service can expect to spend much more to reach the new goal of 355 ships, announced in December, the report found.

While the full cost implications of the 355-ship fleet will be addressed in a future CBO report, the study laid out broad estimates for the ambitious shipbuilding goal.

The Navy could reach a fleet of 353 ships by 2046 by increasing ship production, CBO staff found. Building 321 ships over 30 years would cost the service $25 billion a year, compared with $19 billion a year if the Navy stayed on its current path.

Under this strategy, the Navy would buy one aircraft carrier every three years instead of one every five, increase inventory of attack submarines and surface combatants by 20 percent, and build to 38 amphibious ships, instead of the current goal of 34.

If the Navy wanted to reach its new fleet goal faster, the report found, it could do so by delaying the retirement of some existing older ships, opting instead to perform upgrades to extend service life and improve combat capabilities.

"The Navy could also build ships faster than assumed in this illustration, but doing so would increase costs in the near term and midterm," the report's authors wrote. "Such an approach could be less expensive overall than the alternative described here, but it might not provide the Navy the capabilities that advocates of a larger fleet have in mind."

Whether or not the Navy budgets for 355 ships, it can expect to spend significantly more than it has been each year to reach its shipbuilding goals.

Between 2013 and 2016, the report found, the president's budget request averaged $14.7 billion per year for shipbuilding, though Congress boosted that authorization to an average of $16.3 billion per year.

Because of budget caps implemented as a result of sequestration, the Navy bought only 39 ships across that span of years, though its shipbuilding plan called for 45.

Notably, CBO cost estimates are significantly higher than the service's own figures. Navy officials estimate growth to a 308-ship fleet will cost only $509 billion, $57 billion less than the CBO estimate. They have not publicized a cost figure for a 355-ship fleet.

"CBO's estimates are higher because its estimating methods and assumptions regarding future ships' design and capabilities differ from those that the Navy uses and because its treatment of growth in the costs of labor and materials for building ships is different from the Navy's," the authors write.

They added that their estimates included corollary costs, including carrier refueling and outfitting ships after delivery.

Regardless of current budget conditions, Navy officials have remained adamant: Sequestration must be lifted, and the fleet must be allowed to grow to 355 ships.

Speaking at a Navy League breakfast this week near Washington, D.C., the Navy's acting acquisition chief, Allison Stiller, said budget toplines for future years will determine the rate at which the service can reach its ideal force size.

"The 355 is the force structure assessment. That is where we need to go," she said. "How large the  budget is will influence when we can get to that."