Congressional Budget Office

Testimony

CONGRESSIONAL BUDGET OFFICE

SECOND AND D STREETS, S.W.

WASHINGTON, D.C. 20515

Statement of 

Eric J. Labs 

Senior Analyst for Naval Forces and Weapons 

The Long-Term Outlook for the 

U.S. Navy’s Fleet

before the 

Subcommittee on Seapower and Expeditionary Forces

Committee on Armed Services 

U.S. House of Representatives

January 20, 2010

This document is embargoed until it is delivered at 

3:00 p.m. (EST) on Wednesday, January 20, 2010. The 

contents may not be published, transmitted, or otherwise 

communicated by any print, broadcast, or electronic 

media before that time.

CBO

Mr. Chairman, Congressman Akin, and Members of the Subcommittee, I appreciate 

the opportunity to appear before you today to discuss the challenges that the Navy is 

facing in its plans for building its future fleet. Specifically, the Subcommittee asked 

the Congressional Budget Office (CBO) to examine three matters: the Navy’s draft 

shipbuilding plan for fiscal year 2011, the effect that replacing Ohio class submarines 

with a new class of submarines will have on the Navy’s shipbuilding program, and the 

number of ships that may be needed to support ballistic missile defense from the sea. 

CBO’s analysis of those issues indicates the following:

B If the Navy receives the same amount of money for ship construction in the next 

30 years that it has over the past three decades—an average of about $15 billion per 

year in 2009 dollars—it will not be able to execute its fiscal year 2009 plan to 

increase the fleet from 287 battle force ships to 313.1 As a result, the draft 2011 

shipbuilding plan drastically reduces the number of ships the Navy would purchase 

over 30 years, leading to a much smaller fleet than either the one in the 2009 plan 

or today’s fleet.

B The draft 2011 shipbuilding plan increases the Navy’s stated requirement for its 

fleet from 313 ships to 324, but the production schedule in the plan would buy 

only 222 ships, too few to meet the requirement. The Navy’s current 287-ship fleet 

consists of 239 combat ships and 48 logistics and support ships. The 2009 plan 

envisioned expanding the fleet to a total of 322 ships by 2038: 268 combat ships 

and 54 logistics and support ships. In contrast, under the draft 2011 plan, the fleet 

would decline to a total of 237 ships by 2040: 185 combat ships and 52 logistics 

and support ships.2

B CBO’s preliminary estimate is that implementing the draft 2011 shipbuilding plan 

would cost an average of about $20 billion per year for all activities related to ship 

construction (including modernizing some current surface combatants and refueling ships’ nuclear reactors). A more detailed estimate will follow after the Navy formally submits its final 2011 plan to the Congress in February with the President’s 

budget request. 

B Replacing the 14 ballistic missile submarines (SSBNs) of the Ohio class—which 

are due to start reaching the end of their service lives in the late 2020s—with 12 

new SSBNs could cost about $85 billion. If the Navy received that amount in 

addition to the resources needed to carry out the draft 2011 plan (which includes 

funding for those new submarines), it could probably purchase the additional ships 

identified in the “alternative construction plan” that accompanied the draft 2011 

1. “Battle force” is the term the Navy uses to describe its fleet, which includes all combat ships (surface 

combatants, aircraft carriers, submarines, and amphibious ships) as well as many types of logistics 

and support ships.

2. The Navy’s long-term shipbuilding plans typically cover 30 years, so 2038 is the last year of the 

2009 plan, and 2040 is the final year of the draft 2011 plan.
2

CBO

plan, because CBO’s preliminary estimate of the cost of that alternative plan is an 

average of about $23 billion per year over 30 years.

B Sea-based ballistic missile defense, a relatively new mission for the Navy, could 

require a substantial commitment of resources. That commitment could make it 

difficult for the Navy to fund other ship programs.

Before discussing those issues, however, let me briefly recap CBO’s analysis of the 

2009 shipbuilding plan as a point of departure for examining the draft 2011 plan. 

The Navy’s 2009 Shipbuilding Plan and the 

Effects of Extending Current Funding Levels

	









	





2009 dollars) on shipbuilding: approximately $11 billion to construct new ships and 

$2 billion to refuel nuclear-powered aircraft carriers and submarines and to modernize 

surface combatants. In a report to this Subcommittee, CBO estimated that carrying 

out the Navy’s 2009 plan to build and sustain a 313-ship fleet would cost far more 

than that: a total of about $800 billion (in 2009 dollars) over 30 years—or an average 

of almost $27 billion a year (see Table 1).3 Those costs would include the purchase of 

296 new ships, nuclear refuelings of aircraft carriers and submarines, and the purchase 

of mission modules for littoral combat ships (LCSs). New-ship construction alone 

would cost about $25 billion a year, including new ballistic missile submarines.

The Navy’s cost estimate for implementing the 2009 plan was only slightly lower than 

CBO’s projection. The Navy estimated that it would need to spend a total of about 

$750 billion over the 30-year period of the 2009 plan—or an average of about 

$25 billion per year for all shipbuilding activities and about $23 billion per year 

for new-ship construction alone. In contrast to the similarity between CBO’s and the 

Navy’s estimates for the 2009 plan, CBO’s estimates for the 2007 and 2008 shipbuilding plans were approximately 30 percent to 35 percent higher than the Navy’s estimates (which were substantially smaller than the service’s estimate for its 2009 plan).4

Historical Funding for Ships








	





the major categories of ships has been fairly stable. Surface combatants have received 

about 37 percent of shipbuilding funds; submarines, 30 percent; aircraft carriers, 

16 percent; amphibious ships, 10 percent; and logistics and support ships, 7 percent. 

The 2009 shipbuilding plan envisioned increasing the share of funding devoted to 

submarine construction from 30 percent to an average of 37 percent over the next 

30 years, CBO estimated—largely at the expense of logistics and support ships and 

3. For more details, see Congressional Budget Office, Resource Implications of the Navy’s Fiscal Year 

2009 Shipbuilding Plan, attachment to a letter to the Honorable Gene Taylor (June 9, 2008).

4. Ibid., pp. 10–13. The Navy did not release a shipbuilding plan for fiscal year 2010.
3

CBO

Table 1.

Funding for Major Categories of Ships in the Past and 

Under the Navy’s 2009 Plan

Source: Congressional Budget Office.

a. Includes funding to modernize some existing surface combatants, refuel nuclear reactors on aircraft carriers and submarines, and produce mission modules for littoral combat ships.

	

 	


	


including the costs of replacing the Navy’s SSBNs (which are discussed in more detail 

later in this testimony). Table 1 illustrates some of the challenges the Navy faces in 

funding its ship accounts. Average annual spending for surface combatants would 

have to rise by 80 percent—and spending for submarine construction would need 

to more than double—for the Navy to buy the major combat ships included in the 

2009 plan.

One factor that contributes to the Navy’s funding challenges is the historical trend of 

rising average costs per ship (see Table 2). During the 1980s, the era of the Reagan 

Administration’s military buildup, the Navy paid an average of about $1.2 billion (in 

2009 dollars) for a new ship. The new ships in the 2009 plan would cost an average of 

about $2.5 billion apiece by the Navy’s estimate, or $2.7 billion apiece by CBO’s estimate. The most recent information on actual ship purchases comes from the 2010 

defense appropriation act, which allocates nearly $15 billion to buy seven ships, for an 

average cost of about $2.1 billion each. That figure is smaller than the estimates of 

per-ship costs under the 2009 plan because five of the seven ships purchased in the 

2010 appropriation act (two LCSs, two T-AKE logistics ships, and one high-speed 

Surface Combatants 5.3 9.6

Submarines 4.3 9.9

Aircraft Carriers 2.3 3.7

Amphibious Ships 1.4 2.6

Logistics and Support Ships 1.1 1.1 ____ ____

Total 14.4 26.9 a

Surface Combatants 37 36

Submarines 30 37

Aircraft Carriers 16 14

Amphibious Ships 10 10

Logistics and Support Ships 7 4  ____

Total 100 100

1980 to 2009 2009 to 2038

Average Annual Funding (Billions of 2009 dollars)

Percentage of Total Shipbuilding Budget

Actual, Navy's 2009 Shipbuilding Plan,
4

CBO

Table 2.

Average Ship Costs and Purchases in the Past and Under the 

Navy’s 2009 Plan

 Congressional Budget Office.

Note: n.a. = not applicable.

a. Steady state refers to a situation in which the total number of ships remains constant from one 

year to the next as new ships replace ones that are retired from the fleet.

	



	
		




The 2010 shipbuilding appropriation illustrates how a fleet composed of less expensive ships could stop the trend of growing average costs per ship, although it could 

result in a less capable fleet than the more expensive ships in the Navy’s 2009 plan.

The rise in average ship costs over time may stem from several factors: 

B When the Navy buys a new generation of ships, it improves their capabilities, thus 

driving up their costs.5 For example, the Arleigh Burke class destroyer, which was 

first built in the 1980s, is much more capable—and much more expensive—than 

the preceding Spruance class destroyer, which was built mainly in the 1970s. Likewise, future versions of the Arleigh Burke class destroyer configured to perform 

ballistic missile defense are likely to be more costly than existing ships. 

B Over the past two decades, increases in labor and materials costs to build naval 

ships in the United States have outstripped inflation in the economy as a whole. 

5. A report by the RAND Corporation supports this idea. It concluded that half of the increase in the 

cost of Navy ships from the 1960s to the mid-2000s was attributable to inflation in the economy as 

a whole, and the other half resulted from the Navy’s purchase of increasingly capable ships. See 

Mark V. Arena and others, Why Has the Cost of Navy Ships Risen?A Macroscopic Examination of the 

Trends in U.S. Naval Ship Costs Over the Past Several Decades, MG-484-NAVY (Santa Monica, 

Calif.: RAND Corporation, 2006).

1980s 1.2 17.2

1990s 1.5 7.4

2000s 2.0 6.0

2009 Shipbuilding Plan

Navy’s estimate 2.5 9.9

CBO’s estimate 2.7 9.9

Memorandum:

Steady-State Requirement for a

n.a. 8.9

Average Cost per Ship

(Billions of 2009 dollars) Purchased per Year

Average Number of Ships

313-Ship Fleeta
5

CBO

Specifically, the cost of building ships has been rising about 1.4 percent faster per 

year than the prices of final goods and services in the U.S. economy (as measured 

by the gross domestic product deflator). 

B As average ship costs have increased, the Navy has bought fewer ships. However, 

the fixed overhead costs at naval shipyards may not have declined at the same rate. 

Thus, with fewer ships being purchased, the average amount of fixed overhead 

costs per ship may have risen. 

The numbers in Table 2 illustrate the decline in ship purchases over time. During 

the 1980s, the Navy bought an average of 17.2 ships per year in pursuit of a 600-ship 

fleet. By the 2000s, that number had fallen to 6.0 ships a year. To sustain the steadystate fleet of 313 ships envisioned in the 2009 plan, however, the Navy would need 

to buy 8.9 ships per year, under an assumption that the ships had an average service 

life of 35 years.6 (A larger fleet of 324 ships, the reported goal of the draft 2011 plan, 

would require buying 9.3 ships per year over the long term.) To compensate for earlier 

years in which the Navy bought fewer than 8.9 ships per year, the 2009 shipbuilding 

plan would purchase 9.9 ships each year to achieve and maintain a 313-ship fleet. 

The Effects of Current Budget Levels on the Future Fleet

	


	



plan, senior Navy officials have said in recent months that the service expects to make 

do with $13 billion to $15 billion per year for its future shipbuilding. In October 

2009, the Deputy Assistant Secretary of the Navy for Ship Programs, Allison Stiller, 

said she thought “$13 billion [per year] is about right.”7 Several weeks later, however, 

the Under Secretary of the Navy, Robert O. Work, stated, “We think we can do what 

we need on $15 billion a year.”8

 Those funding levels—which represent about 50 percent to 60 percent of the amount required to fund the 2009 shipbuilding plan—are 

similar to what the Congress has appropriated in recent years. In both 2008 and 

2009, the Navy received about $14 billion for ship construction, in each case more 

than the Administration had requested. For 2010, the President’s budget requested 

$14.9 billion for ship construction, and the Congress appropriated $15.0 billion. 

CBO compared the number of ships that could be purchased with annual budgets 

of either $13 billion ($390 billion over 30 years) or $15 billion ($450 billion over 

6. Steady state refers to a situation in which the inventory of ships theoretically remains constant from 

one year to the next as new ships replace ones that are retired from the fleet. The average number of 

ships that would have to be purchased each year to keep the fleet at a given size indefinitely equals 

that steady-state force size divided by the stated service life of a ship. Thus, a 313-ship fleet divided 

by an average service life of 35 yields a requirement to buy 8.9 ships a year.

7. Zachery M. Peterson, “Stiller: $13 Billion for Shipbuilding Per Year ‘About Right’ for Now,” 

the Navy	



8. Dan Taylor, “Work: Navy Will Try to Keep Shipbuilding Budget at $15 Billion,” 	



	


6

CBO

Figure 1.

Total Funding and Ship Purchases Under Various Scenarios

 Congressional Budget Office.

Note: “Stiller” refers to the Deputy Assistant Secretary of the Navy for Ship Programs, Allison Stiller, 

and “Work” refers to the Under Secretary of the Navy, Robert O. Work.

0

200

400

600

800

1,000

Total Funding over 30 Years

(Billions of 2010 dollars)

Total Ship Purchases over 30 Years

$13 Billion

Annual

Shipbuilding

Budget (Stiller)

$15 Billion

Annual

Shipbuilding

Budget (Work)

2009

Shipbuilding

Plan (Navy's

estimate)

2009

Shipbuilding

Plan (CBO's

estimate)

$13 Billion

Annual Shipbuilding

Budget (Stiller)

$15 Billion

Annual Shipbuilding

Budget (Work)

2009 Shipbuilding Plan

0

100

200

300

400

$2.1 Billion

$2.5 Billion

$2.7 Billion

Average Cost per Ship
7

CBO

30 years) under three scenarios for average ship costs: $2.1 billion per ship, as in the 

2010 defense appropriation; $2.5 billion per ship, as in the Navy’s estimate for the 

2009 plan; and $2.7 billion per ship, as in CBO’s estimate for the 2009 plan.9 That 

plan envisioned buying a total of 296 ships over 30 years. Under the constrained budgets, roughly one-half to three-quarters of that number of ships could be purchased, 

depending on the average cost per ship (see Figure 1). At the bottom end of the range, 

a $13 billion annual budget would buy 144 ships over 30 years at an average cost of 

$2.7 billion apiece. At the top end of the range, a $15 billion annual budget would 

yield 214 new ships over 30 years if their cost averaged $2.1 billion. 

The ship purchases under those scenarios would not be large enough to replace all of 

the Navy’s current ships as they reach the end of their service lives in coming years. 

Consequently, with those annual budget levels and average ship costs, the size of 

the Navy’s fleet would decline over the next three decades from 287 ships to between 

170 and 240 ships. Specifically, if Navy ships cost an average of $2.1 billion apiece, 

the battle force fleet would fall to about 270 ships by 2025 with a $15 billion annual 

budget or to 250 ships with a $13 billion budget (see Figure 2). However, if the cost 

per ship averaged $2.7 billion, the fleet would decline to about 230 ships by 2025 

under the lower budget level or to about 240 ships under the higher level. By 2038, 

the last year of the 2009 shipbuilding plan, the effect on the fleet would be more pronounced. The high end of the range (a $15 billion shipbuilding budget and an average cost of $2.1 billion per ship) would be 240 ships, but the low end (a $13 billion 

budget and $2.7 billion per ship) would yield just 170 ships—60 percent of the size 

of today’s fleet.

The Navy’s Draft 2011 Shipbuilding Plan

	


	

	

	
	


a draft of the Navy’s shipbuilding plan for fiscal year 2011. The six tables, which have 

not been officially released, were published at InsideDefense.com.10

B One table shows an increase in the target size of the battle force fleet from 313 

ships to 324. The target for large surface combatants (cruisers and destroyers) has 

been raised from 88 to 96, and the desired number of support ships has nearly doubled from 20 to 39. Those increases are partly offset by deleting the requirements 

for future maritime prepositioning ships and guided missile submarines.

9. For its estimate, CBO divided the total amount of money that it projected would be necessary for 

all shipbuilding activities in the 2009 plan—new construction, refuelings of nuclear-powered aircraft carriers and submarines, and other (minor) expenditures—by the number of ships purchased 

under the plan to determine the average cost per ship. That calculation was made to allow comparisons with the notional budget levels of $13 billion and $15 billion, which CBO assumed would 

also include all shipbuilding activities. If the calculation used funding for new-ship construction 

alone, the average cost per ship under the 2009 plan would be slightly lower. See Congressional 

Budget Office, 	






 !

10. See www.insidedefense.com/secure/data_extra/pdf8/dplus2009_3796.pdf. 
8

CBO

	

Projected Inventory of Navy Ships Under Various Scenarios

(Number of ships)

 Congressional Budget Office.

Note: “Stiller” refers to the Deputy Assistant Secretary of the Navy for Ship Programs, Allison Stiller, 

and “Work” refers to the Under Secretary of the Navy, Robert O. Work.

$13 Billion

Annual Shipbuilding

Budget (Stiller)

$15 Billion

Annual Shipbuilding

Budget (Work)

2009 Shipbuilding Plan

0

50

100

150

200

250

300

350

$13 Billion

Annual Shipbuilding

Budget (Stiller)

$15 Billion

Annual Shipbuilding

Budget (Work)

2009 Shipbuilding Plan

0

50

100

150

200

250

300

350

2025

2038

$2.1 Billion $2.5 Billion $2.7 Billion

Average Cost per Ship
9

CBO

B Other tables show more details of the draft 2011 plan: construction and funding 

profiles for Navy ships from 2011 to 2015 and the construction profile and inventory of battle force ships from 2011 to 2040. Those profiles indicate that the Navy 

envisions buying 222 ships (including 12 SSBNs) in the next 30 years under the 

draft 2011 plan, compared with 296 ships under the 2009 plan.11 With those purchases, the size of the battle force fleet would peak at 312 ships in 2021 and then 

decline steadily to 237 ships by 2040. (In comparison, the 2009 shipbuilding plan 

envisioned a fleet of 322 ships in 2038, the last year of its projection period.)

B The remaining tables show the construction profile and inventory of battle force 

ships through 2040 under an “alternative construction plan.” That plan assumes 

that the Navy receives funding to purchase a new class of SSBNs in addition to the 

full funding needed for the draft 2011 plan. The alternative plan would purchase 

278 ships between 2011 and 2040. Again, the battle force fleet would peak at 

312 ships in 2021, but thereafter it would decline only to a range of 286 to 291 

ships between 2030 and 2040Cabout the same size as today’s fleet.

Most of the cuts under the draft 2011 plan and the alternative construction plan 

come from the Navy’s combat ships: surface combatants, submarines, aircraft carriers, 

and amphibious ships. Under the 2009 shipbuilding plan, the Navy would have purchased 245 combat ships. That number falls by 32 percent (to 166) in the draft 2011 

plan and by 16 percent (to 207) in the alternative plan (see Table 3). Thus, by 2038, 

the draft plan would produce a fleet of 189 combat ships, compared with 239 today 

or 268 under the 2009 plan. The alternative construction plan would yield a fleet of 

222 combat ships. 

It is not clear from available information what the Navy believes the draft 2011 plan 

will cost. If the service assumed an average annual shipbuilding budget of $15 billion 

over the 30-year period of the plan, the 222 ships purchased under the plan would 

imply an average cost of $2.0 billion per ship. A $13 billion annual shipbuilding budget would imply an average per-ship cost of $1.8 billion. Both of those figures are 

much smaller than the $2.5 billion per ship implied by the 2009 plan. In the alternative 2011 construction plan, which envisions that the Navy will receive an extra 

$85 billion to fund its new class of SSBNs, the service buys 56 additional ships. 

Under that plan, the $15 billion and $13 billion budget levels would imply average 

per-ship costs of $1.9 billion and $1.7 billion, respectively.

CBO’s preliminary assessment of the draft 2011 plan suggests that it would cost considerably more than $15 billion per year to implement. On the basis of the limited

11. According to later press reports, the Navy has added five ships to the 2011 plan: one attack submarine (in 2015), two littoral combat ships (in 2012 and 2013), and two logistics ships (in 2013 

and 2015); see Christopher J. Castelli, “Pentagon Restores Submarine, Seabasing in Budget Endgame,” 	

	



ships, although the testimony that the Congressional Research Service is delivering today does 

reflect those changes. 
10

CBO

Table 3.

	








Shipbuilding Plans

 Congressional Budget Office based on data from the Navy and www.InsideDefense.com.

a. The “alternative construction plan” included in draft Navy documents resembles the draft 2011 

plan but with additional resources provided to fund the replacement of the Navy’s ballistic missile submarines; the costs of that replacement could otherwise displace some ships from the 

construction plan.

b. The Navy currently has 239 combat ships and 48 logistics and support ships, for a total fleet of 

287 ships.

c. Because the Navy’s long-term shipbuilding plans typically cover 30 years, 2038 is the final year 

of the 2009 plan. (The 2011 plans run through 2040.)

	

		
	
		

						
	

building activities in the draft plan would cost an average of about $20 billion a year 

(in 2010 dollars) between 2011 and 2040. The alternative 2011 construction plan 

would cost an average of about $23 billion per year. Those estimates may change 

depending on the details that are in the official 2011 plan when the Navy submits it 

next month.

One notable feature of the draft plan is that the Navy appears to be budgeting 

amounts for the littoral combat ship that would greatly exceed the Congressionally 

mandated cost cap for those ships. The cap, which is adjusted each year for inflation, 

is currently $480 million per vessel (excluding outfitting costs, postdelivery costs, and 

costs for the mission modules that LCSs will carry). According to the draft tables 

available for the 2011 plan, the Navy hopes to buy two LCSs in 2011 for a total of 

Combat Ships 245 166 207

Logistics and Support Ships 51 56 71 ____ ____ ____

Total 296 222 278

In 2025

Combat Ships 266 234 240

Logistics and Support Ships 54 67 67  ____ ____

Total 320 301 307

In 2038c

Combat Ships 268 189 222

Logistics and Support Ships 54 53 66   

 322 242 288

Alternative 2011

2009 Plan Draft 2011 Plan Construction Plana

Total Purchases over 30 Years

Inventoryb
CBO

$1.2 billion, another two in 2012 for $1.2 billion, three in 2013 for $1.8 billion, four 

in 2014 for $2.6 billion, and four more in 2015 for $2.6 billion (all in then-year dollars). Thus, the total amount budgeted for those 15 LCSs between 2011 and 2015 is 

$9.4 billion, whereas the adjusted cost cap would permit no more than $7.8 billion. 

The Cost of Replacing Ohio Class Ballistic Missile 

Submarines

	












based leg of the U.S. strategic triad for delivering nuclear weapons.12 Those submarines will start to reach the end of their service lives in the late 2020s. Under the draft 

2011 plan, replacing the Ohio class SSBNs would consume a significant share of the 

resources devoted to ship construction over the next 30 years. The Navy’s 2009 plan 

included a requirement for a fleet of 14 SSBNs, but it envisioned buying only 12 of 

those submarines, two fewer than in the 2007 and 2008 shipbuilding plans. The 

tables available for the draft 2011 plan suggest that the Navy has reduced its requirement for SSBNs to 12 and that it intends to buy that number of replacements for the 

Ohio class submarines over the next three decades. 

The Navy’s Estimates










SSBN(X)—are among the most significant uncertainties in the Navy’s and CBO’s 

analyses. The Navy’s 2007 and 2008 shipbuilding plans assumed that the first 

SSBN(X) would cost $4.3 billion and that subsequent ships in the class would cost 

about $3.3 billion each, implying an average cost of about $3.4 billion per submarine. 

The 2009 plan explicitly excluded the costs of the SSBN(X), although it included 12 

of the submarines in its projection of future inventories. 

Press reports now indicate that the Navy expects a class of 12 SSBN(X)s to cost a total 

of about $80 billion, an amount that the Navy said it determined by inflating the cost 

of the original Ohio class to today’s dollars. That total implies an average cost of about 

$6.7 billion per submarine.13 The first SSBN(X) would be authorized in 2019 

(although advance procurement money would be needed in 2017 and 2018 for 

long-lead items such as the ship’s nuclear reactor). The second submarine would be 

purchased in 2022, followed by one per year from 2024 to 2033.

12. The other two legs are land-based intercontinental missiles and manned strategic bombers.

13. Christopher J. Castelli, “Navy Confronts $80 Billion Cost of New Ballistic Missile Submarines 

(Updated),” 	

(December 3, 2009). Later in that article, the average cost of a new 

SSBN is said to be $6 billion to $7 billion, implying a total cost of $72 billion to $84 billion for the 

entire class.
12

CBO

CBO’s Estimates

	

				

	




	

expect that an SSBN(X) would be substantially smaller than an Ohio class submarine. 

However, that does not necessarily mean it would be cheaper to build, even with the 

effects of inflation removed.

Since 1991, when the last Ohio class submarine was authorized, the submarine 

industry has improved its design and construction processes. Both General 

Dynamics’s Electric Boat shipyard and Northrup Grumman’s Newport News shipyard 

use more-modern construction techniques and have become more efficient. Those 

changes suggest that using the Ohio class as an analogy to estimate the future costs of 

the SSBN(X) could overstate costs. 

At the same time, however, the factors described above that have caused average ship 

costs to grow over time also apply to submarines. Growth in labor and materials costs 

in the submarine construction industry has outstripped general inflation. In addition, 

the capabilities of the Navy’s submarines have improved over the years, making them 

more expensive to produce. Finally, Ohio class submarines were built at a time when 

the Navy was constructing many more warships (including aircraft carriers at Newport News and submarines at both shipyards) than it is today, which suggests that 

those earlier submarines benefitted from having fixed overhead costs spread over more 

ships. 

The growth in submarine costs over time can be seen by comparing the cost per thousand tons of the lead ship of U.S. submarine classes produced in the past 40 years 

(see Figure 3). In the 1970s, the Navy built the first Los Angeles class attack submarine and the first Ohio class ballistic missile submarine for about $350 million to 

$400 million per thousand tons of Condition A weight (a term analogous to lightship 

displacement on surface ships, which is the weight of the ship excluding fuel, ammunition, crew, and stores). By the late 1980s and 1990s, the cost of the lead ships of the 

Seawolf and Virginia classes of attack submarines had more than doubled to 

$825 million to $850 million per thousand tons.14

In most of its recent naval analyses, CBO has assumed that the SSBN(X) would carry 

16 missile tubes instead of the 24 on existing submarines and would displace around 

15,000 tons submerged—making it roughly twice as big as a Virginia class attack submarine but nearly 4,000 tons smaller than an Ohio class SSBN. On the basis of that 

assumed size—as well as the amount the Navy is currently paying for a Virginia class 

submarine and historical cost growth in shipbuilding programs—CBO estimates that 

12 SSBN(X)s would cost an average of $7.0 billion each (in 2010 dollars). The lead 

ship of the class could cost about $11 billion (including some nonrecurring items) 

when ordered in 2019. In all, CBO expects a class of 12 SSBN(X)s to cost a total of 

about $85 billion.

14. At around 9,100 tons submerged, a Seawolf class submarine is about 20 percent larger than a 

Virginia class submarine but only half the size of an Ohio class SSBN.
13

CBO

	

	

	




Classes of Submarines

(Millions of 2010 dollars)

 Congressional Budget Office based on data from the Navy.

	



	

			



appear to align more closely with CBO’s estimates of the past three years than with 

the estimate that the Navy used in formulating its 2007 and 2008 shipbuilding plans. 

CBO’s estimate of $7.0 billion per submarine is slightly larger than the reported 

Navy figure of about $6.7 billion, which is twice the $3.4 billion average cost that 

the Navy assumed for the SSBN(X) in its 2007 and 2008 shipbuilding plans.

Ballistic missile submarines are more capable of surviving attacks than the other legs 

of the U.S. strategic triad, and they carry about half of the nation’s deployed nuclear 

warheads. Given that role, policymakers may regard replacing the Ohio class when it 

retires as the most critical part of the Navy’s shipbuilding plan. If those SSBNs were 

going to be replaced no matter what happened, and if the Navy received enough 

resources to pay for them above and beyond what it might otherwise expect to allocate 

to shipbuilding, it could use the additional funding to buy more surface ships and 

attack submarines. That is the presumed motivation behind the alternative construction plan that accompanied the draft 2011 plan. CBO’s estimate of the difference in 

costs between the draft 2011 plan and the alternative construction plan is $3 billion 

per year, or a total of about $90 billion (compared with the estimated $85 billion cost 

of 12 SSBN(X)s). Under the alternative plan, that extra $90 billion would purchase 

0

200

400

600

800

1,000

Los Angeles

(SSN-688)

Ohio

(SSBN-726)

San Juan

(SSN-751)

Seawolf

(SSN-21)

Virginia

(SSN-774)

1970 1974 1983 1989 1998
CBO

56 additional ships: 19 large surface combatants, 15 littoral combat ships, 4 attack 

submarines, 3 amphibious ships, and 15 logistics and support ships.

Surface Combatants Required to Support Ballistic 

Missile Defense 

	


	


	




combatants needed to perform the ballistic missile defense (BMD) mission in Europe. 

The answer could range from 3 to 15 depending on the rotation method the Navy 

used to provide ships for BMD patrols, which CBO assumed would require continuous coverage of the patrol areas.15 The Missile Defense Agency (MDA) is also concerned with a broader mission of providing missile defense to parts of the Middle East 

as well as to Europe, which would require additional patrol areas needing continuous 

presence by BMD-capable ships. CBO estimated the number of ships required for 

missile defense—			—using three possible rotation methods:

B Traditional Rotation (5:1)
 !	 
 	

face combatants, five ships (based in Norfolk, Va.) are necessary to keep one ship 

forward deployed in the European theater at all times. That cycle typically keeps 

ships deployed for six months at a time. After that, they spend 18 to 21months in 

their home port while their crews rest and train and the ship undergoes maintenance in preparation for the next six-month deployment (although during much of 

that time, the ship remains in a near-ready state to deploy quickly if necessary).16

Thus, at any point, roughly three of the five ships in the rotation will be in the 

early, middle, or late stage of their time in their home port, a fourth ship will be 

deploying to or from the theater of operations, and the fifth ship will be on-station 

in the theater.

B Rotating Crews (3:1)"
	#$

	$

 


ning for littoral combat ships, three or four crews take turns operating three ships, 

one of which is forward deployed at any given time. Depending on the rotation 

model, a ship remains overseas longer than six months, and replacement crews are 

flown to its location in the theater to take over running it, while two other ships 

remain in their home port in the continental United States for training and maintenance. That rotation method lets ships spend less overall time in transit to and 

from a theater and more time on-station. (In an experiment called Sea Swap 

15. In fact, the requirement for continuous coverage has not yet been established. How much coverage 

is necessary and how frequently it needs to be in place have not been determined by the Department of Defense.

16. Over the next few years, the Navy may keep BMD-capable ships in their home ports for a much 

shorter period until more of those ships are available. The Navy is planning to convert most of its 

84 Aegis cruisers and destroyers to perform ballistic missile defense, but as of 2010, it has converted 

or funded only 27 ships. See Ronald O’Rourke, Sea-Based Ballistic Missile DefenseBackground 

and Issues for Congress		

	

15

CBO

conducted from 2002 to 2006, the Navy successfully rotated crews to individual 

destroyers while the ships were deployed overseas.)17

B Home Port in Theater (2:1 or 1:1)	



capable ships in Europe to provide an immediate response to a crisis or even fulltime coverage of BMD patrol areas. The Navy counts ships that are based abroad as 

providing full-time overseas presence. If the Navy needed to ensure that one ship 

was always at sea providing ballistic missile defense, then a two-ship rotation might 

be necessary to compensate for whatever time the first ship spent in its European 

home port for maintenance or other activities. 

MDA has reported that sometime in the near term—the next five to seven years—

ships may be stationed at three locations in European waters to provide sea-based ballistic missile defense in that theater against Iranian missile threats.18 Under the Navy’s 

traditional deployment cycle for surface combatants, a rotation of 15 ships would be 

needed to provide missile defense in Europe from three stations (see Table 4).

For the broader and more demanding mission, MDA expects to need up to eight 

sea-based BMD stations in Europe and the Persian Gulf in the near term. For the 

longer term10 years and beyondMDA suggests that with improvements in 

BMD-related missiles, radars, and sensors, the number of stations at sea could be 

reduced to five. Under the Navy’s traditional deployment cycle, eight stations could 

require a rotation of 42 ships, whereas five stations could require 26 ships.19

The Navy could reduce the number of ships needed to provide full-time BMD 

presence in Europe by employing alternative crewing schemes or basing ships in the 

theater. For example, if the Navy used rotating crews along the lines of its Sea Swap 

experiments or its plan for LCSs, it might need only three ships to keep one operating 

full time in a designated BMD patrol area. In that case, only 24 ships would be necessary to support eight BMD stations in the near term, or 15 ships to support five 

17. For a more detailed discussion of Sea Swap and the benefits of rotating crews to surface combatants 

to increase the amount of time they can spend forward deployed, see Congressional Budget Office, 

Crew Rotation in the Navy: The Long-Term Effect on Forward Presence (October 2007).

18. CBO used a similar framework in its analysis of ballistic missile defense in Europe. Three ships 

equipped with Standard Missile-3 Block IIA interceptors (which are currently planned to enter the 

fleet in about 2018) would provide nearly complete coverage of Europe against Iranian missiles. See 

Congressional Budget Office, Options for Deploying Missile Defenses in Europe (February 2009), 

pp. 17–22. 

19. Because the Persian Gulf takes longer to reach from the United States than Europe does, the Persian 

Gulf would require a ship-rotation ratio of 6:1 if the ships deployed from Norfolk, Va. (or about 

7:1 if they deployed from the U.S. Pacific Fleet). Thus, for eight stations, six ships in the European 

theater at a ratio of 5:1, plus two ships in the Persian Gulf at a ratio of 6:1, equals 42 ships. For five 

stations, four ships in the European theater at a ratio of 5:1, plus one in the Persian Gulf at a ratio 

of 6:1, equals 26 ships.
16

CBO

Table 4.

	



Presence for Sea-Based Ballistic Missile Defense

 Congressional Budget Office.

a. With five stations, one would be in the Persian Gulf, which would require a rotation ratio of 6:1 if 

the ships deployed from Norfolk, Va. With eight stations, two would be in the Persian Gulf.

	
	
	
	
	
			
		

around Europe, then just nine ships with rotating crews would be needed.

The BMD mission may be better suited to the use of rotating crews than traditional 

missions performed by surface combatants are. A BMD-capable surface combatant 

dedicated to the single mission of providing missile defense patrols would be analogous to the Navy’s SSBNs, which have the single mission of providing deterrent 

patrols at sea with nuclear missiles. Focusing on a single mission makes it easier for the 

multiple crews of a single ship to maintain their proficiency when not on deployment. 

The Navy uses a dual-crew system for SSBNs, in which two crews take turns taking a 

submarine to sea to perform its mission. That system allows strategic submarines to 

spend a majority of their service life at sea, compared with less than 30 percent for 

single-crewed attack submarines.

The Navy, however, does not currently envision dedicating ships to the single mission 

of missile defense. Instead, it plans to send BMD-capable ships on regular deployments to perform the full range of missions required of surface combatants, although 

some of the ships would operate in or near the BMD stations, available to perform 

that mission in the event of heightened tensions. Under such a system, using rotating 

crews on BMD-capable ships could prove far more challenging because the crews 

would need to maintain a high level of proficiency in many types of missions.

Alternatively, if the Navy was able to base BMD-capable ships permanently in Europe 

or the Persian Gulf—as it does now in Japan to counter the threat of North Korean 

missiles—it might need as few as three to eight ships (one for each station). That estimate assumes that the Navy counts each of those ships as providing full-time presence

Traditional Rotation 15 26 a 42 a

Rotating Crews 9 15 24

Home Port in Theater 3 to 6 5 to 10 8 to 16

Europe in the near term) near term)

Europe and the Europe and the

long term)

Number of Ballistic Missile Stations

Five Eight

(Defending (Defending

(Defending only Middle East over the Middle East in the 

Three
CBO

on-station, in the same way that it considers ships based in Japan to be providing fulltime presence even when they are in port undergoing routine maintenance. But if the 

Navy needed to guarantee that one ship per station was at sea at all times, it would 

require a second ship for each of the three to eight stations, doubling the requirement. 

Those additional ships could also be based at home ports in the European theater.