CBO

A

S T U D Y

Transforming the Navy’s

Surface Combatant Force

March 2003

The Congress of the United States # Congressional Budget Office 
Notes

Unless otherwise indicated, the years referred to in this study are fiscal years and the dollar

amounts are in 2003 dollars.

Numbers in the text and tables may not add up to totals because of rounding.

The cover shows the Preble, an Arleigh Burke class (DDG51) guidedmissile destroyer (top),

and an artist’s rendering of the DD(X) future destroyer (bottom). (Pictures are courtesy of the

Navy and Northrop Grumman, respectively.)
Preface

Today, the U.S. Navy numbers about 300 ships, including a force of 115 surface combat

ants (cruisers, destroyers, and frigates). For the past six years, the official force goal for surface

combatants was 116. But recently, senior Navy officials have argued that the nation needs a

larger Navy: 375 ships, including a surface combatant force of 160 ships. That force would

comprise 104 large cruisers and destroyers as well as 56 new, much smaller vessels called

littoral combat ships—which are expected to be an important element of the Bush Administra

tion’s plans for transforming the Navy. Those ships are intended to counter potential threats

in the world’s coastal regions that, if left unchecked, could inhibit the Navy’s freedom of ac

tion. At the same time that it hopes to expand the fleet, however, the Navy plans to retire

many existing surface combatants early.

Reaching the Navy’s new force goal by building more surface combatants would require a

substantial investment, which would compete with other demands, including different trans

formation efforts and ship programs. Are there ways to transform the surface combatant force

within today’s funding level? This Congressional Budget Office (CBO) study—prepared at

the request of the Subcommittee on Seapower of the Senate Committee on Armed Services—

examines that question. It looks at the Navy’s modernization plans for the surface combatant

force and their budgetary implications. The analysis also evaluates three options that would

modernize and transform that force at the current funding level. In keeping with CBO’s

mandate to provide objective, impartial analysis, this study makes no recommendations.

Eric J. Labs of CBO’s National Security Division wrote the study under the general supervi

sion of J. Michael Gilmore. Raymond Hall of CBO’s Budget Analysis Division prepared the

cost estimates and wrote the appendix under the general supervision of Jo Ann Vines. Ian

MacLeod of the National Security Division helped review the manuscript for factual accuracy.

Lyle Nelson, Arlene Holen, David Moore, Dennis Zimmerman, Tracy Foertsch, and

R. William Thomas of CBO provided thoughtful comments on an earlier draft of the study,

as did several officials of the Department of the Navy. In addition, numerous Navy officials

and analysts answered many requests for information. The author is especially grateful to

Robert Work of the Center for Strategic and Budgetary Assessments, whose insights and

comments were extremely valuable. (The assistance of such external participants implies no

responsibility for the final product, which rests solely with CBO.)

Joseph Foote and Christian Spoor edited the study, and Leah Mazade proofread it. Kathryn

Winstead prepared the study for publication. Lenny Skutnik printed the initial copies, and

Annette Kalicki prepared the electronic versions for CBO’s Web site (www.cbo.gov).

Douglas HoltzEakin

Director

March 2003

1

2

3

CONTENTS

Summary xi

Modernizing the Surface Combatant Force and

the Implications for the Navy’s Budget 1

Transformation and What It Means for the Navy 1

The Current Surface Combatant Force 4

Evolving Roles and Missions of Surface Combatants 7

Stated Requirements for Surface Combatants 8

The Navy’s Plan for Transforming the Surface

Combatant Force 9

Budgetary Implications of the Navy’s Plan 17

Options for Managing the Transformation to

the Future Surface Combatant Force 23

Option I: Delay the Transition to NextGeneration Ships

by Making the Most of the Existing Fleet 23

Option II: Accelerate the Transition to NextGeneration

Ships by Retiring Much of the Existing Force Early 28

Option III: Buy Fewer NextGeneration Ships by

Assigning Multiple Crews to New Ship Classes 32

Measures of Capability Under the Various Options 39

Number of Surface Combatants 41

Ships Capable of LongRange Fleet Air and Missile Defense 43

Helicopter Hangars 45

Vertical Launch System Cells 47

Penetrating Littoral Antisubmarine Warfare Suites 49

ERGM and 155Millimeter Guns 53
vi TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

NextGeneration Ships 53

Total Crew Size 53

Average Age 54

Implications of the Analysis 55

Appendix

Cost Estimates for New Ships in the Navy’s

160Ship Plan and CBO’s Option I 59
CONTENTS vii

Tables

S1. Average Annual Spending for Ship Construction, 

by Category, 19902020 xiv

S2. The Surface Combatant Force in 2010 and 2025 Under

Alternative Force Structures xix

1. Characteristics of Current and Proposed Surface Combatants 5

2. Annual Operating Costs for Present and Future Classes 

of Navy Ships 11

3. Average Annual Construction Spending and Procurement

for Navy Ships, by Category, 19902020 21

4. Summary of Program Changes and Assumptions Under

Alternative Force Structures Through 2025 24

5. Average Annual Spending for Procurement and Operation

and Support, 20032025 27

6. Estimated Operating Costs for Future Classes of Navy Ships

Using Single Crews or Multiple Crews 33

7. The Surface Combatant Force in 2025 Under Alternative

Force Structures 57

A1. Estimated Production Schedule for New Surface

Combatants, 20052025 60

A2. CBO’s Cost Estimate for the First DD(X) Destroyer 60

A3. CBO’s Cost Estimate for the First CG(X) Cruiser 62

Figures

S1. Inventory of Surface Combatants Under CBO’s Estimate

of the Navy’s 160Ship Plan, 20012025 xiii

S2. Inventory of Surface Combatants Under Option I, 

20012025 xvi

S3. Inventory of Surface Combatants Under Option II, 

20012025 xvii
viii TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

S4. Inventory of Surface Combatants Under Option III, 

20012025 xviii

1. Composition of the Surface Combatant Force, 2002 4

2. The Number of Surface Combatants the Navy Needs,

According to Various Sources 8

3. Inventory of Surface Combatants Under CBO’s Estimate

of the Navy’s 160Ship Plan, 20012025 18

4. Annual Purchases of Surface Combatants Under CBO’s

Estimate of the Navy’s 160Ship Plan 19

5. Inventory of Surface Combatants Under Option I,

20012025 25

6. Annual Purchases of Surface Combatants Under Option I,

20012025 26

7. Inventory of Surface Combatants Under Option II,

20012025 29

8. Annual Purchases of Surface Combatants Under Option II,

20012025 30

9. Inventory of Surface Combatants Under Option III,

20012025 33

10. Annual Purchases of Surface Combatants Under Option III,

20012025 34

11. Notional MultipleCrew Deployment Cycle for Future

Surface Combatants 35

12. Number of Surface Combatants OnStation in Peacetime

Under Alternative Force Structures, 20012025 41

13. Number of Surface Combatants That Could Be Surged to

Northeast Asia and the Persian Gulf in Wartime Under

Alternative Force Structures, 20102025 42

14. Number of Ships Capable of LongRange Air and Missile

Defense OnStation in Peacetime Under Alternative

Force Structures, 20012025 43
CONTENTS ix

15. Number of Ships Capable of LongRange Air and Missile Defense

That Could Be Surged to Northeast Asia and the Persian Gulf

in Wartime Under Alternative Force Structures, 20102025 44

16. Number of Helicopter Hangars OnStation in Peacetime

Under Alternative Force Structures, 20012025 45

17. Number of Helicopter Hangars That Could Be Surged to

Northeast Asia and the Persian Gulf in Wartime Under

Alternative Force Structures, 20102025 46

18. Number of VLS Cells on Surface Combatants OnStation in

Peacetime Under Alternative Force Structures, 20012025 47

19. Number of VLS Cells on Surface Combatants That Could

Be Surged to Northeast Asia and the Persian Gulf in

Wartime Under Alternative Force Structures, 20102025 48

20. Number of Ships with Penetrating Littoral ASW Suites 

OnStation in Peacetime Under Alternative Force

Structures, 20102025 49

21. Number of Ships with Penetrating Littoral ASW Suites

That Could Be Surged to Northeast Asia and the Persian

Gulf in Wartime Under Alternative Force Structures, 20102025 50

22. Amount of Gunfire Support OnStation in Peacetime

Under Alternative Force Structures, 2015 and 2025 51

23. Amount of Gunfire Support That Could Be Surged to

Northeast Asia and the Persian Gulf in Wartime Under

Alternative Force Structures, 2015 and 2025 52

24. Total Number of NextGeneration Ships Under Alternative

Force Structures, 20102025 54

25. Total Crew Size of the Surface Combatant Force Under

Alternative Force Structures, 20012025 55

26. Average Age of the Surface Combatant Force Under

Alternative Force Structures, 20012025 56
x TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

Boxes

1. Force Structure Under the Navy’s New Operational Concept 10

2. The Role of Helicopters in Countering AreaDenial Threats 15

3. Providing Logistics Support to a Navy That Has

Littoral Combat Ships 16
Summary

The Bush Administration came into office with an

agenda to transform the military into a more effective and

more lethal force. The Navy has numerous transformation

efforts under way—some of which were begun before

President Bush took office—that Navy officials hope will

lead to a better fleet. Such efforts include improvements

to the Navy’s sensors and information networks, a new

and more capable aircraft carrier, new strike and recon

naissance aircraft, and new ways for the Navy and Marine

Corps to organize and fight.

Perhaps the most visible effort is the drive to transform

the surface combatant force. Representing more than one

third of the fleet, that force comprises the Navy’s cruisers,

destroyers, and frigates. (It excludes aircraft carriers, am

phibious ships, and support ships.) Over the next 10 to

15 years, the Navy plans to retire one class of destroyers,

modernize its cruisers and frigates, introduce three new

classes of surface combatants, and experiment with differ

ent operating concepts. If fully implemented, those plans

would produce a surface combatant force of about 160

ships 25 years from now.

This Congressional Budget Office (CBO) study looks at

the composition, missions, and modernization programs

of the Navy’s surface combatant force as well as alterna

tives to the Navy’s current approach to the force. The

study focuses on the surface combatant force for two rea

sons. First, that force is at the heart of the Navy’s plans

to increase the total size of the fleet from a little more than

300 ships to 375. Although that increase includes an addi

tional amphibious ship and several support ships (and

counts some minewarfare ships not already counted as

part of the 300ship Navy), most of the difference is ex

plained by expanding the surface combatant force from

115 ships today to 160 ships. The resources needed for

that expansion are much larger than what the Navy now

spends on surface combatants. A CBO projection of the

demands on the Navy’s shipbuilding budget through 2020

shows that without large budget increases, transforming

the surface combatant force could crowd out funding for

other ship programs. That situation could pose particular

problems for the attack submarine force, which will

require substantially greater funding than it now receives

if the Navy wants to maintain the existing number of

submarines.

Second, the new ships in the surface combatant force are

the primary means by which Navy officials expect to defeat

threats posed by relatively inexpensive weapon systems

that potential opponents might use to inhibit the Navy’s

freedom of action (a strategy known as area denial). Ac

cording to the 2001 Quadrennial Defense Review (QDR),

defeating those threats should be a central objective of

transformation.

As an alternative to the Navy’s current plans, this study

examines three approaches for structuring surface com

batant programs that would produce a larger and more

capable force in 2025 than exists today but would limit

average annual spending on procurement and direct

operation and support costs to roughly the amount spent

last year: $6.6 billion (in 2003 dollars). Those different

approaches are:

• Retaining and modernizing ships that the Navy now

plans to retire and buying a new frigate to provide pres

ence, counter areadenial threats, conduct maritime

interception operations, and carry out other missions.

• Retiring more ships earlier than the Navy plans while

accelerating the introduction of new classes of surface

combatants—but buying them in fewer numbers.
xii TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

• Buying a much smaller number of new surface com

batants than the Navy proposes but operating them

with multiple crews to achieve a far higher rate of

peacetime availability.

Those options represent three strategies for managing the

Navy’s transition to a new generation of surface combat

ants. The first approach emphasizes the modernization

of the Navy’s “legacy” fleet—the surface combatants that

already exist. The other two approaches emphasize the

transformation to a new generation of ships. Each of the

three approaches would have a very different effect on the

force structure and on the capabilities it would provide

to the Navy. Using several measures of capability, CBO

compares the three options with one another and with

the approach that the Navy is taking.

The key conclusion of that analysis is that the Navy could

cap spending at today’s level and still have a larger and

much more capable force of surface combatants 25 years

from now. However, the additional money that the Navy

would spend under its plan would provide an even bigger

and more effective force than any of CBO’s options

would.

The Surface Combatant Force 

and Its Missions

As of this writing, the Navy’s force of surface combatants

comprises 17 Spruance class (DD963) generalpurpose

destroyers, 27 Ticonderoga class (CG47) cruisers, 33

Oliver Hazard Perry class (FFG7) guidedmissile frigates,

and 38 Arleigh Burke class (DDG51) guidedmissile

destroyers (more DDG51s are under construction).

Those ships constitute the ultimate Cold War generation

of surface combatants designed for openocean, high

intensity naval warfare against the Soviet Union.

In the past 25 years, surface combatants have seen dra

matic improvements in their capabilities. Historically,

surface combatants served as escorts for highervalue ships

(such as aircraft carriers) or for merchant vessels, pro

tecting them from attack by aircraft, submarines, or small

surface craft. Their landattack capability was restricted

to shortrange naval guns. New weapon systems—par

ticularly the vertical launch system (VLS) for missiles and

the Aegis airdefense combat system—have greatly im

proved the ability of surface combatants to provide air and

missile defense for a naval task force. In addition, the VLS

and the Tomahawk cruise missile have enabled surface

combatants to attack targets far inland, well beyond the

range of traditional naval guns and even naval aviation.

Because of those advances, the current generation of U.S.

surface combatants is among the best—if not the best—in

the world today.

The Resource Implications of

Modernizing the Surface

Combatant Force

According to statements by Navy leaders and official

briefings, the Navy proposes to introduce a new generation

of surface combatants designed to confront new threats

and perform new missions. With the demise of the Soviet

navy, no challenges to U.S. naval supremacy remain on

the open ocean. As a result, Navy leaders have refocused

their attention on influencing events on land, operating

in the crowded coastal regions of the world, and over

coming new antiaccess and areadenial threats to U.S.

warships operating closer to shore (within the range of

a potential enemy’s weapons). The Navy expects the next

generation of ships, designed especially for coastal areas,

to reduce the risks that U.S. naval forces might face in that

new operating environment and to increase the combat

effectiveness of those forces.

The Navy’s transition, or transformation, plan calls for

the early retirement of some currentgeneration destroyers,

the upgrading of other existing ships, and the introduction

of a new family of surface combatants. Specifically, the

Navy intends to retire all Spruance class destroyers and

the first five Ticonderoga class cruisers by the end of 2006

and upgrade the combat and reliability systems of the

remaining Ticonderogas and Oliver Hazard Perry class

frigates. The Navy’s main focus, however, is on buying

the DD(X) future destroyer, starting in 2005; the littoral

combat ship, also starting in 2005; and the CG(X) future

cruiser, beginning around 2014.

The DD(X) is intended to be a multimission ship with

an emphasis on land attack. It is expected to carry up to

128 VLS cells and one or two 155millimeter (mm) ad
SUMMARY xiii

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

20

40

60

80

100

120

140

160

180

DD-963

FFG-7

CG-47

DDG-51

DD(X)

LCS

CG(X)

Summary Figure 1.

Inventory of Surface Combatants Under CBO’s Estimate of the Navy’s

160-Ship Plan, 2001-2025

Source: Congressional Budget Office.

Note: DD-963 = Spruance class general-purpose destroyer; FFG-7 = Oliver Hazard Perry class guided-missile frigate; CG-47 = Ticonderoga class guided-missile cruiser;

DDG-51 = Arleigh Burke class guided-missile destroyer; DD(X) = future general-purpose destroyer; LCS = littoral combat ship; CG(X) = future guided-missile

cruiser.

vanced gun systems capable of hitting targets 100 nautical

miles away. It is also designed to be highly stealthy. Exactly

how many DD(X)s the Navy plans to buy is unclear, but

as of this writing, 16 appears to be the number.

The littoral combat ship (LCS) is intended to be much

smaller than the DD(X). The Navy wants it to be a

“focusedmission” ship with a modular design, in which

combat systems could be changed relatively easily de

pending on what mission the ship was assigned to per

form. At any given time, the LCS could be configured

to carry out only one of three missions: mine countermea

sures, antiboat operations, or littoral antisubmarine war

fare. As with the DD(X), the Navy has not stated officially

how many LCSs it plans to buy, but for this analysis, CBO

assumed that the service would purchase 56 of the ships,

which is consistent with some statements by Navy officials

and with briefings that CBO has received.

The CG(X) future cruiser would also be a multimission

ship, sharing many features with the DD(X). It is sup

posed to emphasize air and ballistic missile defense. Al

though the Navy has not said how many of the new

cruisers it intends to buy, presumably it would eventually

want to purchase between 24 and 42 if it pursued its cur

rent Global Concept of Operations (or Global CONOPs).

Determining the Navy’s Modernization Plans

Estimating the resources necessary to carry out those ef

forts is difficult because the Navy has not stated exactly

how many surface combatants it wants or needs, nor has

it laid out a longterm modernization program in any

detail. Consequently, CBO developed two longterm pro

curement plans in an effort to gauge the level of resources

that the Navy believes is necessary to modernize the surface

combatant force. The first is based on a plan contained

in the Report on Naval Vessel Force Structure Requirements,

released in June 2000 (referred to here as the 30Year

Shipbuilding Report). That report proposed a ship

construction plan to maintain a force of 116 large surface

combatants, with no new small warships. Officially, it is
xiv TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

Summary Table 1.

Average Annual Spending for Ship Construction, by Category, 1990-2020

(In billions of 2003 dollars)

Actual Steady-State Cumulative Surplus 

Average Funding Required or Shortfall (-) Projected Average

Force Goal Annual (Based on 1997 Relative to Steady- Annual Spendingb

(Number Spending, and 2001 QDR State Funding, 2003- 2011-

Category of ships) 1990-2002 force goals)a 1990-2002 2010 2020

Surface Combatants 116 3.6 3.4c 2.0c 5.1 6.2

Attack Submarinesd 58 1.3 3.9 -34.1 4.2 6.3

Ballistic Missile

Submarinese 14 0.3 0.8 -7.1 0.6 0.4

Aircraft Carrierse 12 1.4 1.4 -0.5 2.0 2.1

Amphibious Ships 36 0.9 1.1 -1.8 0.6 0.9

Other 70 0.9 0.7 2.9 1.0f 1.0f

Total 306 8.5 11.3 -38.7 13.5 16.9

Source: Congressional Budget Office.

Note: QDR = Quadrennial Defense Review.

a. The steady state represents the annual spending required to maintain the fleet at the level of the force goals, which are very close to current levels.

b. CBO projection based on the Navy’s proposed 375-ship fleet, including 160 surface combatants.

c. If the requirement for surface combatants was 160 (reflecting the Navy’s 160-ship plan including about 60 littoral combat ships), the steady-state budget would

be $5.2 billion a year and the cumulative 1990-2002 shortfall would be $19 billion.

d. These numbers represent a slight change from the force goals in the 1997 and 2001 QDRs. They assume 54 attack submarines and four Trident submarines converted

to a guided-missile configuration, whereas the 1997 QDR called for 50 attack submarines, and the 2001 QDR seemed to affirm a force goal of 55 attack submarines.

e. Includes funding for refueling overhauls.

f. Includes Maritime Prepositioning Force Future ships.

the only longterm program for Navy ship construction

on record that is available to CBO.

The second plan is based on the 2004 Future Years De

fense Program, public statements by Navy officials, un

official sources, and evidence in Navy briefings—outlined

most lucidly in the Navy’s new Global CONOPs briefing

—from the spring and summer of 2002. That plan would

upgrade 22 Ticonderoga class cruisers and 33 Oliver

Hazard Perry class frigates and would begin procuring 16

DD(X)s and 56 littoral combat ships in 2005. Ten to 15

years from now, the Navy would start replacing the up

graded Ticonderogas with CG(X)s. CBO assumed that

the Navy would buy 32 CG(X)s through 2025. Under

that approach, the inventory of surface combatants would

grow from 115 today to about 160 ships in the next 25

years—88 cruisers and destroyers capable of providing

longrange air defense as well as the 16 DD(X) destroyers,

and 56 littoral combat ships (see Summary Figure 1 on page

xiii). Thus, CBO refers to that approach as the Navy’s

160ship plan. Of the two procurement plans, the Navy’s

160ship plan (based heavily on the Global CONOPs

briefing) is the more consistent with current Navy

thinking on the future of the surface combatant force.

Budgetary Implications of the Navy’s Plans

Both the 30Year Shipbuilding Report plan and the Navy’s

160ship plan would require greater resources than the

surface combatant force has received in recent years or

expects to receive under the President’s budget request

for 2004. That request envisions that the Navy will spend

$3.2 billion in 2004—or about 28 percent of the ship

building budget—to buy surface combatants. The rest

of the ship construction budget would go to build aircraft

carriers, submarines, amphibious ships, and support ships.

In contrast, by CBO’s estimate, the Navy would need to

spend an average of $5.9 billion a year (in 2003 dollars)

on procurement between 2003 and 2025 to implement

the 160ship plan—or more than half of the shipbuilding

budget in the President’s 2004 request. (The amount

required to carry out the 30Year Shipbuilding Report

plan would be similar.)
SUMMARY xv

At the same time, other components of the Navy will need

greater resources if Navy leaders are to achieve their overall

force goals. CBO estimates that to meet those goals, the

budget for ship construction would have to average about

$17 billion a year between 2011 and 2020—about $3 bil

lion more than the average required for the 20032010

period (see Summary Table 1) and twice what the Navy

spent between 1990 and 2002. (The Navy’s shipbuilding

budget in 2003 is about $8 billion.)

Summary Table 1 shows how deep the hole in the Navy’s

ship construction budget has become, and how building

a larger surface combatant force would exacerbate the

problem. Before 2002, the Navy’s total force goal for ships

was still officially about 300. That goal was set by the 1997

QDR, and the 2001 QDR referred to that fleet as being

the base on which transformation would be built. Sus

taining a 300ship Navy indefinitely (that is, in steady

state) would require spending about $11 billion a year on

ship procurement, CBO estimates. But since 1990, the

Navy has spent only about $8.5 billion per year, on aver

age. Thus, the total shortfall in ship construction relative

to the spending necessary to maintain a steadystate fleet

of around 300 ships now stands at almost $39 billion. The

lion’s share of that shortfall involves attack submarines,

of which the Navy bought seven between 1990 and 2002.

In the past year, by contrast, senior Navy admirals have

argued that they need 375 ships to perform all of the mis

sions asked of the service. By far the biggest change in

force goals is the increase in the desired level of surface

combatants from 116 to 160. In short, the Navy is pro

posing a major expansion of the surface combatant force

that will require considerable resources at the same time

that other ship programs will need more funding if current

force levels are to be maintained.

Structuring the Future Surface

Combatant Force at Today’s

Funding Level

Transforming the surface combatant force need not be

as expensive a proposition as the Navy’s 160ship plan

would be. CBO examined three different options to struc

ture the force, each of which would require no more than

an average of about $6.6 billion a year (in 2003 dollars)

for procurement and direct operation and support costs

between 2003 and 2025—about what the Navy spent in

2002. The three approaches emphasize different tradeoffs

between keeping the legacy generation of ships and

transforming it over the next two decades. The first option

would make maximum use of ships already in the fleet.

The second would speed up development and acquisition

of new ship classes by retiring many existing ships even

faster than the Navy plans. The third would introduce a

multiplecrew operating concept for the Navy’s new ship

classes, allowing the service to buy fewer surface com

batants than envisioned in the Global CONOPs but pro

viding more forward presence during peacetime.

Option I: Delay the Transition to Next-Generation

Ships by Making the Most of the Existing Fleet

The ships that make up the legacy generation of Cold War

surface combatants remain formidable fighting ships.

Recognizing that fact, this approach would keep many

of those surface combatants through the end of their

notional service lives to ease the shortage of ships that

Navy admirals have argued now exists. The Spruance class

destroyers would be retained and upgraded, as would the

Ticonderoga class cruisers and Oliver Hazard Perry class

frigates. With respect to new ship classes, the CG(X)

would be delayed for five years, and the DD(X) and lit

toral combat ship would be canceled. In their place, the

Navy would build a nextgeneration frigate that was more

capable than the littoral combat ship but smaller and less

costly than the DD(X). That frigate would perform all

three LCS missions (mine countermeasures, antiboat

operations, and littoral antisubmarine warfare). In addi

tion, it would have robust defensive capabilities to make

it more survivable in the littoral environment.

Under this approach, the surface combatant force would

grow substantially through 2013 compared with the force

in the Navy’s 160ship plan. Indeed, between 2003 and

2012, this option would provide the largest inventory of

surface combatants of any approach examined in this

study. After 2013, however, as older ships began to be

retired in large numbers, the force would fall well below

the number of surface combatants that the Navy would

have under the 160ship plan (see Summary Figure 2). By

2025, the surface combatant force would number 130

ships under this option, with an average age of a little over

20 years—greater than under any other approach.
xvi TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

20

40

60

80

100

120

140

160

180

DD-963

FFG-7

CG-47

DDG-51

CG(X)

FFG(X)

Total Inventory Under

Navy's 160-Ship Plan

Summary Figure 2.

Inventory of Surface Combatants Under Option I, 2001-2025

Source: Congressional Budget Office.

Note: DD-963 = Spruance class general-purpose destroyer; FFG-7 = Oliver Hazard Perry class guided-missile frigate; CG-47 = Ticonderoga class guided-missile cruiser;

DDG-51 = Arleigh Burke class guided-missile destroyer; FFG(X) = future guided-missile frigate; CG(X) = future guided-missile cruiser.

Option II: Accelerate the Transition to NextGeneration Ships by Retiring Much of the Existing

Fleet Early

In this option, the Navy would more aggressively pursue

the new capabilities and ships promised by nextgeneration

technology. To free up the funds for that effort, it would

dramatically cut the surface combatant force in the short

term. Essentially, this option would fit the Navy’s 160

ship plan within the constraints of an average budget of

$6.6 billion a year for procurement and operation and

support. It would upgrade the combat and reliability

systems of 13 of the current 27 Ticonderoga class cruisers;

of the other 14, the first five would be retired by 2006 and

the rest by 2014, well before the end of their notional 35

year service life. This approach would follow the Navy’s

plan to retire all Spruances by 2006. In addition, it would

retire all Perry class frigates by 2010. It would buy 12

DD(X)s, accelerate the procurement of the CG(X) to

2012, and purchase only 30 littoral combat ships, starting

in 2005.

Overall, this approach would give up many older ships

in the short run to have more nextgeneration ships in the

long run. The force would immediately and sharply

decline, falling to 85 ships by 2010—by far the smallest

force of all the approaches that CBO examined (see

Summary Figure 3). By 2025, however, the purchase of

new ships, especially the littoral combat ship, would bring

the force up to 123 surface combatants. This option would

produce a younger force than CBO’s other two options

would: the age of surface combatants would average a little

over 18 years in 2025.

Option III: Buy Fewer Next-Generation Ships

by Assigning Multiple Crews to New Ship Classes

Under this approach, the Navy would transform the sur

face combatant force through a different operating concept

—using three crews to operate two ships. By doing so,

the Navy could provide the same forward presence as

under its 160ship plan but with a smaller fleet and for

much less money. However, although multiplecrewed

ships can provide about twice the peacetime presence of

singlecrewed ships, they offer no extra benefit during war.

(Wartime capability would be based on the number of

hulls in the surface combatant force.) This option would

restrict the new crewing concept to future ship classes, on
SUMMARY xvii

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

20

40

60

80

100

120

140

160

180

DD-963

FFG-7

CG-47

DDG-51

CG(X)

LCS

Total Inventory Under

Navy's 160-Ship Plan

DD(X)

Summary Figure 3.

Inventory of Surface Combatants Under Option II, 2001-2025

Source: Congressional Budget Office.

Note: DD-963 = Spruance class general-purpose destroyer; FFG-7 = Oliver Hazard Perry class guided-missile frigate; CG-47 = Ticonderoga class guided-missile cruiser;

DDG-51 = Arleigh Burke class guided-missile destroyer; DD(X) = future general-purpose destroyer; LCS = littoral combat ship; CG(X) = future guided-missile

cruiser.

the theory that it would be easier to design new ships to

accommodate multiple crews than to modify existing ones.

With respect to ship programs, this approach would follow

the Navy’s plan in retiring Spruances early and upgrading

Ticonderoga cruisers and Perry frigates. It would also buy

the same types of nextgeneration surface combatants as

Option II but fewer of them: eight DD(X)s and 28 littoral

combat ships. The CG(X) would be delayed until 2018,

and only 15 would be purchased. Because those new

classes of ships would use multiple crews and spend more

time at sea, they would cost more to operate than single

crewed ships would. CBO included those higher costs in

its analysis.

Under this option, the surface combatant force would rise

to 124 ships by 2025, but the multiplecrewing concept

would make that force equivalent to 165 singlecrewed

ships in peacetime (see Summary Figure 4). That force

would be the second oldest examined here, with an average

age of about 20 years in 2025.

Measures of Capability Under

the Various Approaches

To evaluate the different options in this study and com

pare them with the plan in the 30Year Shipbuilding

Report and the Navy’s 160ship plan, CBO used various

measures of peacetime and wartime capability for the sur

face combatant force. The principal measures were the

total number of surface combatants, the total number of

VLS cells that those ships carry, the number of ships capa

ble of longrange fleet air defense, the number of heli

copter hangars on surface combatants, the number of

penetrating littoral antisubmarine warfare suites, the num

ber of guns capable of firing extendedrange guided muni

tions and the number of 155mm advanced gun systems

(to provide longrange fire support to the Marine Corps),

the number of nextgeneration ships, the total crew size

of the surface combatant force, and its average age.

Because the Navy’s principal peacetime mission is main

taining a combatcredible forward presence, capabilities
xviiiTRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

20

40

60

80

100

120

140

160

180

DD-963

FFG-7

CG-47

DDG-51

CG(X)

LCS

Total Inventory Under

Navy's 160-Ship Plan

DD(X)

Equivalent Peacetime Force Level

(Adjusted for multiple crewing)

Summary Figure 4.

Inventory of Surface Combatants Under Option III, 2001-2025

Source: Congressional Budget Office.

Note: DD-963 = Spruance class general-purpose destroyer; FFG-7 = Oliver Hazard Perry class guided-missile frigate; CG-47 = Ticonderoga class guided-missile cruiser;

DDG-51 = Arleigh Burke class guided-missile destroyer; DD(X) = future general-purpose destroyer; LCS = littoral combat ship; CG(X) = future guided-missile

cruiser.

onstation (in a ship’s theater of operations) are a better

measure of how well the surface combatant force performs

than fleet totals are. Conversely, in wartime, the critical

measure is how much actual firepower can be brought to

bear in a given period of time. Thus, CBO calculated the

“surge” capacity of each force structure 14 days and 36

days after the beginning of a wartime mobilization. (Chap

ter 3 provides a detailed assessment of how the different

force structures compare using CBO’s measures.)1

Of the approaches analyzed in this report, the Navy’s 160

ship plan would provide the most capable and balanced

force of surface combatants—but at a cost that could

prove prohibitive. However, all of the alternatives that

CBO examined, even those with constrained budgets,

would produce a fleet of surface combatants that was

much more effective than today’s force (see Summary

Table 2).

Although Option I’s force would be the oldest, it would

also be the largest and most capable in 2010, according

to the majority of measures that CBO used. By 2025,

however, it would still be the oldest fleet and would no

longer be as capable as the Navy’s planned 160ship force.

Option II’s strong suit would be its number of next

generation ships, which is a wartime measure. Conversely,

Option III would be the best among CBO’s options with

respect to peacetime presence. The force of the 30Year

Shipbuilding Report would have the most VLS cells and

155mm guns by 2025 because it would purchase more

DD(X)s—in the absence of a littoral combat ship—than

would any other approach.

1. Those measures purposely exclude the capabilities that other Navy

ships, notably aircraft carriers, could bring to a conflict. Because

the analysis focuses on surface combatants, the measures assess only

the combat capabilities of those ships, although they would most

likely be used in tandem with other Navy ships.
SUMMARY xix

Summary Table 2.

The Surface Combatant Force in 2010 and 2025

Under Alternative Force Structures

Number of

LongTotal Average Total Range Air- Littoral NextNumber Age Crew Defense Helicopter ASW Generation VLS Guns

Force Structure of Ships (Years) Size Ships Hangars Suites Ships Cellsa ERGM 155-mm

2010

30-Year Shipbuilding Report 120 16.2 38,200 89 174 0 0 8,800 30 0

Navy’s 160-Ship Plan 117 15.4 36,400 84 170 2 3 8,600 49 2

Option I 133 18.0 43,100 87 204 0 0 9,700 58 0

Option II 85 11.8 29,100 82 106 2 3 8,400 30 2

Option IIIb 112 15.5 35,400 82 162 0 0 8,300 48 0

2025

30-Year Shipbuilding Report 122 17.6 33,900 90 186 32 49 14,500 31 64

Navy’s 160-Ship Plan 162 15.3 36,600 90 212 34 89 14,000 49 32

Option I 130 20.2 36,000 90 204 40 42 11,200 96 0

Option II 123 18.5 32,200 83 162 21 49 10,600 31 24

Option III

Peacetime equivalentc 165 19.8 36,700 93 218 34 82 13,100 49 32

Actual hulls 124 19.8 36,700 88 164 17 41 10,400 49 16

Memorandum:

Current Force 115 13.3 36,700 69 168 0 0 7,300 12 0

Source: Congressional Budget Office.

Notes: ASW = antisubmarine warfare; VLS = vertical launch system; ERGM = extended-range guided munition; mm = millimeter.

Option I would delay the transition to next-generation surface combatants by making the most of the existing fleet. Option II would accelerate the transition

to next-generation ships by retiring much of the existing force early. Option III would buy fewer next-generation ships by assigning multiple crews to new ship

classes.

a. These numbers assume 61 VLS cells for Spruance destroyers, 90 for Flight I/II Arleigh Burke destroyers, 96 for Flight IIA Arleigh Burke destroyers, 64 for the first

two modernized Ticonderoga cruisers, 128 for the next three modernized Ticonderoga cruisers, 122 for Improved Ticonderogas, 128 for DD(X) destroyers, 200

for CG(X) cruisers, and 48 for a next-generation frigate.

b. There are no multiple-crewed ships in the fleet by 2010 under this option.

c. The force level and capability numbers for this alternative are the peacetime equivalents of single-crewed ships. That is, the 124 ships of Option III are equivalent

to 165 single-crewed ships in their ability to provide forward presence.

1

Modernizing the Surface Combatant Force and

the Implications for the Navy’s Budget

L ike the rest of the military, the Navy is pursuing

a variety of initiatives to transform itself into a more effec

tive and lethal force. Those initiatives include improving

sensors and information networks, developing a new and

more capable aircraft carrier as well as new strike and re

connaissance aircraft, and changing the way that the Navy

and Marine Corps are organized and fight. One of the

Navy’s highest priorities is transforming the surface com

batant force. That force, which represents more than one

third of the fleet, comprises the Navy’s cruisers, destroyers,

and frigates. Over the next 10 to 15 years, the Navy in

tends to retire one class of destroyers, modernize its

cruisers and frigates, introduce three new types of surface

combatants (in particular, a new small warship), and ex

periment with different operating concepts. If those plans

were fully implemented, they would result in a force of

around 160 surface combatants in 25 years, compared

with 115 ships today.

That transformation effort has serious budgetary implica

tions for the Navy’s shipbuilding programs. The resources

needed to make those changes would be much greater than

what the Navy spends on surface combatants now. The

Congressional Budget Office (CBO) projects that in the

absence of large increases in the Navy’s shipbuilding bud

get through 2020, transforming the surface combatant

force could crowd out funding for other ship construction

programs, particularly for attack submarines.

In addition to their budgetary implications, the Navy’s

plans for surface combatants are important because the

new ships represent the primary means by which Navy

officials expect to defeat the threat of relatively inexpensive

weapon systems that potential opponents might use to

inhibit the Navy’s freedom of action. According to the

2001 Quadrennial Defense Review (QDR), overcoming

that threat should be a key objective of transformation.

That objective echoes the Navy’s effort in the 1980s to

build new surface combatants capable of defeating large

scale attacks by antiship missiles launched from Soviet

ships and aircraft.

This CBO study examines the composition, missions, and

modernization programs of the Navy’s surface combatant

force. It also analyzes three alternative approaches to the

Navy’s transformation plan that highlight key issues and

tradeoffs associated with transformation. Those ap

proaches were designed to improve the surface combatant

force while maintaining roughly the current funding level:

an average budget of $6.6 billion a year (in 2003 dollars)

for both procurement and operation and support between

2003 and 2025.1

Transformation and What It Means

for the Navy

No universal agreement exists about what military “trans

formation” means or why it is necessary. In the past few

1. This analysis treats average spending for research and development

as a constant between 2003 and 2025, although CBO’s cost esti

mates for the first DD(X) destroyer and the first littoral combat

ship do include the research and development money being spent

to build those ships (see the appendix for more details).

CHAPTER
2 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

years, President Bush has outlined a vision of military

transformation in which the number of major combat

platforms is much less important than mobility, speed,

and the ease of sustaining forces. In his words, the trans

formed military would rely “heavily on stealth, precision

weaponry and information technologies.”2

 The President

argues that technology is changing the nature of warfare

and that if the U.S. armed forces do not embrace those

changes, the United States will lose its military superiority

and ability to protect its interests, if not its security. Thus,

he seeks dramatic improvements in military capability.3

The Navy has recently begun to describe what trans

formation might mean for its forces.4

 But critics complain

that the service has been slow to recognize the importance

the Bush Administration places on transformation and

that its efforts to date have been disorganized and lacking

a clear direction or set of priorities.5

 Other observers take

a very different view, arguing that the Navy has trans

formed itself in terms of capabilities and the ability to per

form new missions, compared with what it could do 20

years ago. They also argue that the Navy’s investment in

communications and sensor technology, as well as the way

it has operated over the past 30 years, represents a trans

formation that the Army and Air Force are only now dis

covering and trying to achieve. The implication is that

either the Navy has done a poor job of explaining how

it has already transformed itself or it does not recognize

itself as already being transformed.6

Countering Antiaccess Threats

Although echoing some of the President’s themes about

transformation, the 2001 Quadrennial Defense Review

focused on the need to defend U.S. global interests against

regional opponents in the coming decades. The military’s

fear is that other countries whose interests conflict with

the United States’ will be able to buy advanced, yet rela

tively inexpensive, weapons that will make U.S. military

action very costly. The weapons that the Navy worries

about most are mines; antiship cruise missiles; small, fast

attack boats; and dieselelectric submarines (especially

those with closedcycle, airindependent propulsion sys

tems, which can remain underwater for weeks and are

extremely quiet.)

If a country had enough of those weapons, it could im

plement what defense analysts call an asymmetric naval

antiaccess or areadenial strategy. Such a strategy would

not attempt to challenge and defeat U.S. naval forces

directly. Instead, it would seek to inhibit the Navy’s opera

tions by strewing coastal areas with mines, putting hun

dreds of antiship cruise missiles along the shore or on

small, fast boats, and having several quiet dieselelectric

submarines hide in noisy coastal waters. One official Navy

report states: “In future crises and conflicts . . . access

denial weapons could make the projection of U.S. power

so costly that the United States might be deterred from

acting.”7

 Or, if the nation had to act anyway, such weap

ons could either prevent U.S. forces from prevailing or

result in a Pyrrhic victory.

The 2001 QDR was explicit in saying that naval trans

formation must occur to defeat areadenial threats: “Anti

ship cruise missiles, advanced diesel submarines, and ad

vanced mines could threaten the ability of U.S. naval and

2. Address by George W. Bush given at the U.S. Naval Academy,

May 25, 2001. See also “Remarks by the President to the Troops

and Personnel” (speech given at the Norfolk Naval Air Station,

February 13, 2001); and “U.S. President George W. Bush Ad

dresses the Corps of Cadets” (speech given at the Citadel, Decem

ber 11, 2001).

3. Ibid.

4. See Department of the Navy, Naval Transformation Roadmap:

Power and Access . . . From the Sea (2002). 

5. See Gopal Ratnam, “Critics Question Depth of Navy’s Sea Power

Vision,” Defense News (June 24, 2002), p. 12; see also Ronald

O’Rourke, “Transformation and the Navy’s Tough Choices Ahead:

What Are the Options for Policy Makers?” Naval War College

Review (Winter 2001).

6. See Norman Friedman, “Are We Already Transformed?” Pro

ceedings, U.S. Naval Institute (January 2002), pp. 3436; and

Colonel Robert O. Work, USMC (ret), The Challenge of Maritime

Transformation: Is Bigger Better? (Washington, D.C.: Center for

Strategic and Budgetary Assessments, 2002).

7. Department of the Navy, Vision . . . Presence . . . Power (1999),

p. 3.
CHAPTER ONE MODERNIZING THE SURFACE COMBATANT FORCE AND THE IMPLICATIONS FOR THE NAVY’S BUDGET 3

amphibious forces to operate in littoral waters. New ap

proaches for projecting power must be developed to meet

these threats.”8

Using Forward Presence for Deterrence

The 2001 QDR also stressed the importance of deterring

conflict by keeping substantial, powerful U.S. forces de

ployed around the world. “Transforming the U.S. global

military posture begins with the development of new ways

to deter conflict. Deterrence in the future will continue

to depend heavily upon the capability resident in forward

stationed and forwarddeployed combat and expeditionary

forces, including forcible entry forces, along with the

rapidly employable capabilities that the U.S. military

possesses throughout the globe.”9

 The implication was

that transformation should increase the military capabili

ties that the United States maintains overseas. That impli

cation was made explicit in the subsequent Defense Plan

ning Guidance, which directed the services to maintain

forward presence in four theaters to dissuade potential

adversaries from acting against the United States’ interests

and allies.

Transforming Technology

Another perspective on transformation is more general.

It says that advances in technology—particularly com

munications, sensors, detection equipment, and precision

weapons—provide an opportunity to create a smaller force

with the same lethality and effectiveness as a much larger

force.10 In today’s defense jargon, such advances allow the

military to “mass effect, not forces.” (For example, a

stealthy bomber carrying 16 laserguided bombs is likely

to do more damage to a series of targets than 10 bombers

carrying only conventional “dumb” munitions.)

Some advocates of naval transformation want to use devel

oping technologies to better link sensors, computers, com

munications, and precision weapons into coherent net

works so the Navy can engage enemies faster and more

efficiently—thus projecting power more effectively, espe

cially on land. Indeed, although the Navy characterizes

many of its programs as being part of military “trans

formation,” it emphasizes what it calls FORCEnet (also

known as networkcentric warfare) as one of the service’s

most important initiatives. FORCEnet is a technological

effort that includes improvements in hardware and soft

ware to link all of the communication, sensor, and warfare

systems of the Navy’s ships so that every ship in a battle

force has the same tactical data available. Thus, one ship’s

sensors might detect a threat, and even if that ship did not

have the means to counter it, the threat could still be dealt

with quickly because every other Navy ship operating in

the area would know about it at the same time. If the

FORCEnet effort succeeds, surface combatants, along with

other Navy ships, may become more capable and effective

than they are today.

Employing New Operating Concepts

Another way of thinking about naval transformation is

to include different operating concepts that would allow

the Navy either to provide a greater level of overseas pres

ence or to reduce the number of platforms necessary to

maintain the current level of presence. One such concept

is to base more Navy ships overseas. The 2001 QDR expli

citly included homeporting ships overseas as part of naval

transformation.11

The Navy is pursuing some of those new operating con

cepts. It plans to base three attack submarines in Guam

by early 2004. The Navy is also considering basing a

cruiser/destroyer squadron there and possibly additional

submarines.12 Another option would be to use multiple,

rotating crews on surface combatants to keep them 8. Department of Defense, Quadrennial Defense Review Report

(September 30, 2001), p. 31. Other analysts voice the same view

point. See, for example, many of the publications issued by the

Center for Strategic and Budgetary Assessments in Washington,

D.C.

9. Department of Defense, Quadrennial Defense Review Report, p. 25.

10. Many Navy officials share that view of transformation. See also

Friedman, “Are We Already Transformed?”

11. Department of Defense, Quadrennial Defense Review Report, p. 27.

See also O’Rourke, “Transformation and the Navy’s Tough Choices

Ahead,” pp. 103104.

12. Statement of Rear Admiral Miles B. Wachendorf, U.S. Navy,

Director, Strategy and Policy Division, before the Subcommittee

on Seapower of the Senate Armed Services Committee, March 19,

2002.
4 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

Arleigh Burke Class

Guided-Missile

Destroyers

(DDG-51)

Spruance Class

General-Purpose

Destroyers

(DD-963)

Oliver Hazard Perry

Class GuidedMissile Frigates

(FFG-7)

Ticonderoga Class

Guided-Missile

Cruisers

(CG-47)

17 33

27

38

deployed overseas for much longer periods than are now

the case. As Chapter 2 discusses in more detail, the Navy

began an experiment in the fall of 2002 that will rotate

three crews from Spruance and Arleigh Burke class

destroyers to one ship, with the objective of keeping the

ship overseas for about 18 months, substantially increasing

the time it spends onstation.

The Budgetary Implications of Transformation

The obvious question is whether the Navy’s transforma

tion efforts are expected to be accomplished under exist

ing, smaller, or larger budgets. Some enthusiasts of trans

formation imply that a smaller, more effective force could

also be a cheaper one.13 Other advocates believe that trans

forming some parts of the Navy could free up resources

to transform or enlarge other parts. Finally, some observers

argue that transformation should not be achieved by

reducing force structure.14

In the wake of the terrorist attacks of September 11, 2001,

the idea of spending less money on the military has fallen

out of favor. Moreover, the development of and transition

to “transformational” technologies is proving expensive.

Thus, although the longterm cost implications of military

transformation are uncertain, a smaller defense budget

may not result.15

The Current Surface Combatant Force

As noted above, the Navy’s definition of surface com

batants includes cruisers, destroyers, and frigates. (It used

to include battleships, but they have been retired.) The

service’s proposed littoral combat ship, which would be

smaller than a frigate, would also be defined as a surface

combatant. That definition excludes aircraft carriers and

amphibious ships as well as smaller vessels such as mine

warfare ships and patrol craft.

The four classes of surface combatant in active service

represent the ultimate development of Cold War

generation ships. Designed for combat against the Soviet

Navy in the open ocean, they comprise 17 Spruance class

(DD963) generalpurpose destroyers, 33 Oliver Hazard

Perry class (FFG7) guidedmissile frigates, 27 Ticon

deroga class (CG47) guidedmissile cruisers, and 38

Arleigh Burke class (DDG51) guidedmissile destroyers

(see Figure 1).

Figure 1.

Composition of the Surface

Combatant Force, 2002

(Number of ships)

Source: Congressional Budget Office based on Navy data.

Seventeen Spruance class destroyers remain from an

original Cold War production run of 31 ships. Each one

carries two 5inch naval guns, a formidable openocean

antisubmarinewarfare suite, two helicopters, shortrange

antiship missiles, and a shortrange antimissile system (see

Table 1).16 As the first of the final Cold War generation

of surface combatants, Spruance destroyers introduced

many technologies and systems that have been used on

subsequent combatants, including a gasturbine propul

13. See, for example, the discussion in O’Rourke, “Transformation

and the Navy’s Tough Choices Ahead,” p. 98.

14. For an overview of those schools of thought, see O’Rourke,

“Transformation and the Navy’s Tough Choices Ahead.” See also

James R. Blaker, Understanding the Revolution in Military Affairs:

A Guide to America’s 21st Century Defense, Defense Working Paper

No. 3 (Washington, D.C.: Progressive Policy Institute, January

1997).

15. See Congressional Budget Office, The LongTerm Implications of

Current Defense Plans (January 2003), and Budgeting for Defense:

Maintaining Today’s Forces (September 2000).

16. Most of the information in this and the subsequent paragraphs

of this section was taken from Norman Polmar, The Naval Institute

Guide to the Ships and Aircraft of the U.S. Fleet (Annapolis, Md.:

Naval Institute Press, 2001).
CHAPTER ONE MODERNIZING THE SURFACE COMBATANT FORCE AND THE IMPLICATIONS FOR THE NAVY’S BUDGET 5

Table 1.

Characteristics of Current and Proposed Surface Combatants

Ship Class Type

Displacement

(Tons) Crew Size

Range at

20 Knots

(Nautical

miles) Armament Missions 

Current Ships

DD-963 Spruance General-purpose

destroyer

9,300 Up to 375 6,000 Two helicopters, two

5-inch guns, eight

Harpoon antiship

missiles, 61 VLS cells

Land attack, openocean antisubmarine

warfare

FFG-7 Oliver

Hazard Perry

Guided-missile

frigate

4,100 221 4,200 Two helicopters, one

Mark 13 launcher

and magazine with 40

self-defense missiles,

one 76-mm gun,

six torpedo tubes

Convoy escort,

maritime interception,

open-ocean

antisubmarine

warfare

CG-47 Ticonderoga Guided-missile

cruiser

9,500 Up to 410 6,000 Aegis combat system,

two helicopters,

two 5-inch guns,

122 VLS cellsa

Long-range air and

missile defense, land

attack, open-ocean

antisubmarine warfare

DDG-51 Arleigh

Burke (Flight I/II)

Guided-missile

destroyer

8,400 340 4,400 Aegis combat system,

one 5-inch gun,

eight Harpoon antiship

missiles, 90 VLS cells

Long-range air and

missile defense, land

attack, open-ocean

antisubmarine warfare

DDG-51 Arleigh

Burke (Flight IIA)

Guided-missile

destroyer

9,200 340 4,400 Aegis combat system,

two helicopters,

one 5-inch gun,

96 VLS cells

Long-range air and

missile defense, land

attack, open-ocean

antisubmarine warfare

Proposed Shipsb

DD(X) General-purpose

destroyer

16,000 95 to 200 N.A. Two helicopters, two

155-mm advanced gun

systems, 128 VLS cells

Land attack,

antisubmarine

warfare

Littoral Combat

Ship

Focused-mission

combatant

3,000 N.A. N.A. One helicopter,

one mission module

Counterboat,

countermine, littoral

antisubmarine warfare

CG(X) Guided-missile

cruiser

16,000

or more

N.A. N.A. Next-generation air

and missile defense

combat system, 200 VLS

cells, two helicopters,

possibly other systems

Long-range air and

missile defense,

land attack

Source: Congressional Budget Office.

Note: VLS = vertical launch system; mm = millimeter; N.A. = not available. 

a. The first five ships of the class, CG-47 to CG-51, do not have VLS cells.

b. Many of the characteristics of these ships represent estimates published in media reports or CBO assumptions based on conversations with Navy officials.
6 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

sion system and a digital antisubmarinewarfare combat

system. The Spruances were later modernized with an anti

ship missile capability, and 24 of them received the vertical

launch system (VLS)—composed of easytomaintain

groups of launcher “cells” inside a ship’s hull—to fire

Tomahawk cruise missiles at targets on land. All of the

ships still in service are equipped with 61 VLS cells. The

oldest Spruance in the activeduty fleet is 27, and the

average age of the active ships is 22. Their notional

expected service life is 35 years.

The second class of the Cold War family of surface com

batants was the Oliver Hazard Perry guidedmissile frigate.

Thirtythree of those ships remain in commission (out

of 51 built for the Navy), including eight assigned to the

Naval Reserve.17 Those ships were designed to help defend

sea lines of communication—essentially to serve as convoy

escorts—during the Cold War. They carry 40 local air

defense and antiship cruise missiles, fired by two single,

abovedeck launchers; a rapidfire cannon; two helicopters

and a towedarray sonar system; and a terminal missile

defense gun—all of which provide useful combat capa

bilities for less stressful naval missions. The age of the old

est Perrys still in commission is 23, and the average age

of the class is 19. Their notional expected service life is

35 years. As one reference work puts it, “The soundness

of the design has permitted the expansion [of capabilities],

and the ships have proven remarkably sturdy.”18

Ticonderoga class cruisers use the same hull design as

Spruance class destroyers, but they carry a much more

formidable combat system. They are multimission ships

capable of conducting antisubmarine warfare, antiship

operations, land attack, and especially longrange air

defense for a group of ships. They were the first U.S. sur

face combatant to be equipped with the Aegis combat sys

tem, which was and is the most advanced antiaircraft/

antimissile warfare system in the world. The first five

Ticonderogas do not have VLS cells. Instead, they carry

two abovedeck twinmissile launchers fed by belowdeck

rotary missile magazines, which hold a total of 88 antiair

and antisubmarine missiles. The remaining 22 Ticon

deroga class ships, sometimes referred to as Improved

Ticonderogas, have 122 VLS cells capable of firing a

variety of weapons, including Tomahawk landattack

missiles. The first ship of this class was commissioned in

1983, making the oldest Ticonderoga 20 years old. The

average age of the class is 14. Its notional expected service

life is 35 years.

Arleigh Burke class guidedmissile destroyers are the

second warship designed to carry the Aegis combat system.

They are the newest surface combatants in the fleet. Their

hull form differs from that of the Spruances and Ticon

derogas, and they have a faceted superstructure that re

duces their radar cross section to onetenth that of a

Ticonderoga class cruiser. The 38 Arleigh Burkes now in

commission are divided among three groups, or “flights”:

• Flight I, the earliest set, comprises 21 ships, each

equipped with 90 VLS cells. Although ships of this type

have a flight deck on which a helicopter can land, and

most are equipped to refuel and rearm a helicopter, they

have no hangar and thus would not normally be de

ployed with a helicopter.

• Flight II comprises seven ships that incorporate several

combat system improvements. Flights I and II are

sufficiently similar that they are normally grouped

together.

• Flight IIA comprises 10 ships. They are somewhat

larger than previous Arleigh Burkes to accommodate

a hangar for helicopters, which would be deployed with

the ships. They also have 96 VLS cells and employ

moresophisticated combat systems and radars than

earlier flights do.

As of this writing, another 24 Arleigh Burkes are being

built, have been authorized, or may be authorized between

now and 2005, for a total planned production run of 62

ships. However, if the Navy experiences problems in de

veloping its proposed DD(X) destroyer, it will almost

certainly lengthen production of Arleigh Burkes to support

the two shipyards that build surface combatants. The first

Arleigh Burke was commissioned in 1991, and the average

age of the class is only 5. The ships have a notional ex

pected service life of 35 years.

17. Additional ships were built for foreign navies.

18. A.D. Baker III, The Naval Institute Guide to Combat Fleets of the

World, 20022003: Their Ships, Aircraft, and Systems (Annapolis,

Md.: Naval Institute Press, 2000), p. 965.
CHAPTER ONE MODERNIZING THE SURFACE COMBATANT FORCE AND THE IMPLICATIONS FOR THE NAVY’S BUDGET 7

Evolving Roles and Missions

of Surface Combatants

In the past quarter century, surface combatants have

already undergone a transformation in their capabilities.

Early Cold War cruisers and destroyers generally carried

mostly defensive weapons—surfacetoair missiles and

antisubmarine rockets—to screen highervalue ships (such

as aircraft carriers) and merchant vessels from attack. They

also supported amphibious forces with naval gunfire.

Today, surface combatants can and still do carry out those

missions, but they have also taken on new roles and per

form some of their old ones in fundamentally different

ways.

Probably the three biggest improvements in the design

of surface combatants in recent decades were the Aegis

combat system, the vertical launch system, and longrange

Tomahawk missiles. The Aegis system—which includes

a powerful multifunction, phasedarray (fixedantenna)

radar, firecontrol directors, computers, displays, and

power sources—gives a cruiser or destroyer the capability

to defend an entire battle group against aircraft and mis

siles. The system can track hundreds of air targets up to

200 nautical miles, and because it can update the target

data sent to its missiles in flight, it does not have to guide

them continuously after launch. As a result, Aegiscapable

ships can attack as many as 20 targets simultaneously—a

vast improvement over previous antiairwarfare systems.

The Aegis system is also less prone than its predecessors

to jamming or to electronic countermeasures, and it is

effective against seaskimming antiship missiles. In short,

the Aegis system enhances the capabilities not only of the

ships that carry it but also of their entire battle group,

because it provides for longrange detection, is capable

of longerrange interception, and is less susceptible to

saturation raids than previous combat systems.

The vertical launch system also created a revolution of

sorts in the combat capabilities of surface combatants, for

several reasons. First, the system uses space efficiently. The

five Ticonderoga class cruisers without VLS cells can carry

88 missiles apiece in their magazines for use by their two

twinmissile launchers. Ticonderogas with the VLS can

carry 122 missiles in their 122 cells, a nearly 40 percent

improvement. Second, the system can be easily converted

from an offensive system to a defensive one depending

on what type of missile is loaded into the cell. Third, the

VLS itself is a relatively lowmaintenance weapon system

that requires little training to operate. Finally, the VLS

cells nestled in the center of a ship below the deck line are

less susceptible to battle damage than abovedeck launchers

are. (Even small hits on those launchers will essentially

eliminate a ship’s combat effectiveness.)

The third major improvement, Tomahawk missiles, have

provided surface combatants with the capability to con

duct longrange strike (or landattack) operations. In the

past, a surface combatant’s ability to hit targets on land

was limited to the range of its guns (27 nautical miles for

the 16inch guns of Iowa class battleships and 13 nautical

miles for the 5inch guns on modern warships). The

development of Tomahawk missiles and VLS cells has

given surface combatants the ability to strike targets 700

miles inland—farther than the range of carrierbased air

craft (unless they are refueled in flight). The VLS/Toma

hawk combination also allows ships to launch missiles

quickly. A surface combatant armed only with Toma

hawks could fire its entire complement within minutes

if an operation demanded it. A new version of the Toma

hawk missile just beginning production is expected to

double the weapon’s range and provide additional im

provements. (Other landattack missiles, which would be

compatible with the VLS, are also being developed.)

In short, the combination of the VLS and Tomahawk has

vastly improved the landattack capabilities of surface

combatants. Into the 1980s, not one of the Navy’s cruisers,

destroyers, or frigates could strike targets more than 13

miles inland. Today, 82 surface combatants have long

range strike capabilities. 

The missions of the surface combatant force may evolve

further in the future. With improvements to their radars

and missiles, cruisers and destroyers may be able to pro

vide ballistic missile defense within a theater and, possibly,

play a role in national missile defense. Such changes could

require the development of larger ships to accommodate

moresophisticated radars and larger, faster intercept mis

siles. Other types of ships, smaller than any in the current

force, might also be necessary to fulfill missions that sur

face combatants already perform and will still be required

to carry out 30 years from now.
8 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

J

J

J

J

J

J

J

J

J

J

J J

J

J

SC-21 SCFLS QDR SCFLS II 30-Year QDR Admiral

0

50

100

150

200

250

COEA

(1995)

(1995) (1997) (1999) Shipbuilding

Report

(2000)

(2001) Clark

(2002)

a

Figure 2.

The Number of Surface Combatants the Navy Needs,

According to Various Sources

Source: Congressional Budget Office.

Note: SC-21 COEA = Surface Combatant 21 cost-effectiveness analysis; SCFLS = Surface Combatant Force Level Study; QDR = Quadrennial Defense Review.

a. Admiral Vernon Clark, Chief of Naval Operations.

Stated Requirements for

Surface Combatants

An essential question in this analysis is, How many surface

combatants does the Navy need? The service has not

answered that question definitively or consistently. Fur

thermore, the answer depends on responses to other, re

lated questions. What does the Navy want to do with its

surface combatants? Does it need larger numbers of

smaller, lesscapable platforms, or should it buy fewer but

morecapable platforms? Finally, will the Navy continue

to operate its surface combatants as it has in the recent

past—that is, by basing them in the United States and de

ploying them only about once every two years?

Studies by the Department of Defense and the Navy over

the past 10 years have produced various estimates of the

required number of surface combatants (see Figure 2). One

analysis of that issue, the Surface Combatant Force Level

Study, published in August 1995, stated that the Navy

needed 135 to 165 surface combatants to meet wartime

requirements.19 That conclusion was based on an extensive

war game in which U.S. forces fought two major theater

wars (in Northeast Asia and the Persian Gulf) at the same

time. The figure of 165 represents “peak demand” for

surface combatants 30 to 80 days into a conflict, assuming

no assistance from allies. If nations friendly to the United

States are assumed to contribute 30 ships to the fight, the

total wartime requirement falls to 135 surface combatants.

19. Office of the Chief of Naval Operations, Director, Surface Warfare,

Surface Combatant Force Level Study: Requirements for Joint Warfare

(August 1995).
CHAPTER ONE MODERNIZING THE SURFACE COMBATANT FORCE AND THE IMPLICATIONS FOR THE NAVY’S BUDGET 9

Two years later, however, the 1997 QDR concluded that

the Navy should operate only 116 surface combatants.

The report did not provide much information about how

that figure was determined, but 116 was the number of

surface combatants in the fleet at the time. The subsequent

QDR, in 2001, did not discuss specific requirements for

forces but stated that the current force levels, set by the

1997 QDR, would be the base from which transformation

would occur.

In 1999, the Navy completed the Surface Combatant

Force Level Study II. It was intended to update the 1995

analysis and provide an authoritative statement of the

Navy’s requirements for surface combatants. That study

was never released (because of the start of the 2001 QDR),

but press reports indicate that it concluded that 95 surface

combatants would be necessary to meet peacetime require

ments in 2015, whereas 145 would be needed to fight

simultaneous major theater wars in the Persian Gulf and

Northeast Pacific.20

In June 2000, the Secretary of Defense released the Report

on Naval Vessel Force Structure Requirements (also known

as the 30Year Shipbuilding Report), whose completion

the Congress had mandated in the 2000 defense authori

zation act.21 That report argued that naval forces were in

high demand and that the 1997 QDR force was being

heavily tasked. To reduce the risks posed by growing

operational demands, the report advocated a 10 percent

to 15 percent increase in the number of surface combat

ants, apparently to support a proposed increase in the

number of aircraft carriers from 12 to 15.

Today, the Navy is again reevaluating its requirements

for surface combatants, primarily because of the war on

terrorism, pressure from the Bush Administration to trans

form the current fleet, and the new forwardpresence

posture outlined in the most recent Defense Planning

Guidance. In the judgment of the Chief of Naval Opera

tions, Admiral Vernon Clark, the Navy would need a fleet

of at least 375 ships, including 30 to 60 littoral combat

ships, to meet all of its requirements.22 Under the Navy’s

evolving future concept of operations, the surface combat

ant part of that 375ship Navy would amount to 160

ships. (For a more detailed explanation of what a 375ship

Navy might look like, see Box 1.)

The Navy’s Plan for Transforming 

the Surface Combatant Force

The uncertainty about how many surface combatants the

Navy needs reflects uncertainty about the proper size and

scope of transformation from older to newer generations

of ships. How quickly will anticipated antiaccess or area

denial threats evolve? Does the Navy need to transform

only a few of its platforms or its entire force structure to

counter those threats? More important, to what extent

should the focus of transformation be on capabilities or

numbers of ships? 

Prominent members of the Bush Administration have

stated that the emphasis in any modernization program

needs to be on capabilities.23 They appear to be saying that

what is required is a set of capabilities to achieve certain

tasks. If those capabilities can be provided by a smaller

number of platforms, so be it. Others, including Navy

officials and Members of Congress, have argued that num

bers matter and that the Navy needs to buy more ships

and have a larger fleet.

The Navy’s plan for transforming the surface combatant

force reflects that tension between capabilities and num

bers. Over the next five years, the Navy intends to retire

some older surface combatants before the end of their

notional service life, cutting the fleet in the short term,

even though stated requirements and Navy officials have

20. See Robert Holzer, “Requirements Rise May Force Larger U.S.

Warship Fleet,” Defense News (May 24, 1999), p. 1; and Roman

Schweizer, “New Surface Ship Force Level Study Evaluates Future

Capabilities, Needs,” Inside the Navy (May 10, 1999), p. 1.

21. Secretary of Defense William Cohen, Report on Naval Vessel Force

Structure Requirements (June 26, 2000).

22. See Dale Eisman, “Navy Leader Makes Case for New Ships De

signed to Speed Quietly to Hot Spots,” VirginianPilot (May 2,

2002); Kerry Gildea, “Clark Estimates Future Naval Fleet at 375

Ships,” Defense Daily (February 19, 2002), p. 9; and Andrew Koch,

“USN Pushes Littoral Combat Ship,” Jane’s Defence Weekly (Janu

ary 23, 2002).

23. For example, see Ron Laurenzo, “Wolfowitz: U.S. Must Focus on

Capabilities,” Defense Week (February 25, 2002).
10 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

Box 1.

Force Structure Under the Navy’s New Operational Concept

The Navy recently began to rethink how it will use and

deploy its warships. Today, the Navy’s principal groups

of ships are 12 aircraft carrier battle groups, 12 amphibi

ous ready groups, and seven surface action groups

(which are designated for use in the Middle East). At

tack submarines deploy either with one of those groups

or independently. Amphibious ready groups usually do

not operate with surface combatants; thus, they generally

are not capable of performing strike operations.

Under its new Global Concept of Operations (or Global

CONOPs), the Navy would juggle its surface com

batants to create more “strike groups.” In the past, six

surface combatants were notionally assigned to a carrier

battle group. Actual deployments could see four to

eight. The Global CONOPs would reduce that number

to three. It would also assign three surface combatants

to the amphibious ready groups to create 12 “expedi

tionary strike groups” (the first of which has already

been deployed) and create two additional surface action

groups. The four Trident submarines that the Navy is

converting to perform conventional strike and special

operations missions would each constitute an inde

pendent strike force. Thus, the Global CONOPs would

produce a total of 37 strike groups.

That operational concept would more evenly balance

the Navy’s strike capability across the fleet and allow

the Navy to have strike presence in all four theaters

called for in the Defense Planning Guidance. The new

expeditionary strike groups would have the ability to

perform missions that in the past could be handled only

by a carrier battle group. The defensive capabilities of

surface combatants would permit the groups’ amphib

ious ships to operate in morehostile environments, and

the Tomahawk missiles on surface combatants would

provide longrange strike capability. New DD(X) de

stroyers, with their 155millimeter guns, would be

assigned to the expeditionary strike groups, providing

a shorterrange strike capability as well as fire support

for the Marine Corps.

According to the Navy, implementing that concept

would require 375 ships, including 160 surface com

batants. The 33 surfaceship strike groups would need

three cruisers or destroyers each, plus five more mostly

for wartime surge, for a total of 104 cruisers and de

stroyers. In addition, the Navy plans to buy 56 littoral

combat ships, many of which would work with the

strike groups, protecting them from mines, submarines,

and small boats. The rest of the Navy’s fleet would

comprise 12 aircraft carriers, 37 amphibious ships, 55

attack submarines, four converted Trident submarines,

14 ballistic missile submarines, and 93 logistics, coun

termine, and support ships.

Not all observers would agree that the Global CONOPs

represents transformation. After all, the Navy has em

ployed surface combatants with amphibious ready

groups in the past, albeit not on a regular basis. How

ever, if the Navy does reduce the number of surface

combatants associated with carrier battle groups to

create more strike groups, it will be organizing the fleet

in a way that provides the flexibility and forward pres

ence stressed in the 2001 Quadrennial Defense Review

and the Defense Planning Guidance. Such reorganiza

tion also provides a justification for buying more ships

and creating a larger force structure.

called for more, not fewer, ships. After that, however, it

would develop and deploy large numbers of a family of

nextgeneration ships: the big multimission DD(X) class

destroyer, a small “focusedmission” ship called the littoral

combat ship (LCS), and a large multimission cruiser

known as the CG(X). By 2025, the Navy’s plan would

result in a surface combatant force that was not only 40

percent larger than today’s force but much more capable

than the current Cold War generation of ships. 

Retiring Spruance Class Destroyers Early

The Navy plans to retire its 17 remaining Spruance class

destroyers by 2006 rather than keep them in service to

the end of their notional life of 35 years. On decommis
CHAPTER ONE MODERNIZING THE SURFACE COMBATANT FORCE AND THE IMPLICATIONS FOR THE NAVY’S BUDGET 11

sioning, those ships will average only 24 years of service.

The Navy is retiring the stillcapable destroyers early to

save money: with a crew of 380 and the oldest technology

of Cold Wargeneration ships, Spruances are more expen

sive to operate and maintain than most of the Navy’s other

surface combatants (see Table 2). Eliminating those ships

would save an average of about $600 million per year in

operating and support costs. 

Table 2.

Annual Operating Costs for Present

and Future Classes of Navy Ships

Ship Class

Millions of

2003 Dollars

Current Operating Costs

DD-963 Spruance Destroyer 34

FFG-7 Oliver Hazard Perry Frigate 19

DDG-51 Arleigh Burke Destroyer 26

CG-47 Ticonderoga Cruiser 35

Estimated Operating Costs Based on Cost Goals

DD(X) Future Destroyer 20

Littoral Combat Ship 14

CG(X) Future Cruiser 27

Source: Congressional Budget Office using data from the Navy’s Visibility and

Management of Operating and Support Costs (VAMOSC) database.

Note: Operating costs for ships not yet deployed represent CBO estimates based

on the Navy’s manning and cost thresholds for those vessels. Operating

costs for the CG(X) are based on the same goals as those for the DD(X).

Some Navy officials also regard Spruance class destroyers

as unreliable and more prone to unexpected breakdowns

than any other surface combatant. Various engineering

systems are said to be particularly unreliable. The Navy

argues that retaining Spruances for their full service life

would require upgrading those systems as well as some

of the ships’ combat systems, at a cost of $50 million to

$100 million per ship. That approach would be similar

to the upgrades that the Navy performed on Leahy and

Belknap class cruisers in the 1980s, which it retained in

the fleet until the early to mid1990s.

Keeping Spruances running for a total of 35 years would

cost an average of $45 million a year per ship for needed

upgrades and operations. As a matter of relative cost, that

would make keeping Spruances in service cheaper than

building new destroyers, and somewhat more expensive

than building the asyetundesigned littoral combat ship.

The equivalent costs are about $60 million a year for a

new Arleigh Burke class destroyer and about $30 million

a year for the littoral combat ship, CBO estimates.24

Clearly, Spruances are much less capable than newly built

guidedmissile destroyers. They lack the Aegis airdefense

system and carry onethird fewer VLS cells. But a better

comparison of their capabilities would be with the new

littoral combat ship. A modernized Spruance would have

two naval guns, 61 cells for landattack missiles, and two

helicopters; as a result, its selfdefense and antisubmarine

warfare capabilities could prove equal to those of the

smaller LCS. However, Spruances would be larger and

much less stealthy than the LCS, so the latter could prove

to be more survivable against modern threats in coastal

regions, although that is by no means certain.

Improving Ticonderoga Class Cruisers and

Oliver Hazard Perry Class Frigates

In contrast to its plan for Spruances, the Navy wants to

upgrade the combat systems, habitability, and machinery

of Ticonderoga class cruisers and Oliver Hazard Perry class

frigates so that those ships will be useful throughout their

notional service lives or longer. The cruisers will receive

especially extensive improvements that will, in some cases,

change their mission. 

According to the 2003 Future Years Defense Program

(FYDP), the Navy was planning to upgrade all 27 Ticon

deroga class cruisers. Fourteen, including the five oldest

ships, would be outfitted with improved firecontrol sys

tems, radars, and selfdefense systems, and their guns

would be converted to the 5inch, 62caliber design capa

ble of firing extendedrange guided munitions. In addi

tion, the first five ships of the class, which have abovedeck

launchers, would have the VLS installed (the first two

would receive 64 cells, and the other three would get 128).

The remaining 13 Ticonderogas would receive many of

the same improvements in radars, computers, and self

24. Those cost estimates do not include the normal midlife upgrades

to combat and engineering systems that would be necessary to em

ploy ships for their full service life—35 years for destroyers and

(CBO assumed) 25 years for littoral combat ships.
12 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

protection systems, as well as better missiles and even more

advanced radars in order to perform theater ballistic mis

sile defense. In the 2004 FYDP, however, the Navy has

altered its conversion plan for Ticonderogas: it proposes

canceling the upgrades to the first five ships and retiring

them early.25

The Navy argues that by updating the combat systems

of Ticonderogas, it will extend their useful service life to

as much as 40 years. Doing so, however, implies a substan

tial overlap between that cruiser conversion effort and the

program to build a new cruiser, the CG(X) (discussed

later). If the Navy upgraded all 27 Ticonderogas, the first

one would not retire until 2023, four years after the Navy

wants to commission the first CG(X). If the Navy reduced

its requirement for cruisers to 22 by retiring the first five

Ticonderogas early, all 22 would remain in the fleet until

2026, when the first of them would retire. For this analy

sis, CBO assumed that under the Navy’s 160ship plan,

the upgraded Ticonderogas would serve for 35 years.

(CBO’s options, however, take advantage of the Navy’s

estimate of a 40year service life for upgraded Ticon

derogas.)

The Navy also plans to upgrade its Oliver Hazard Perry

class guidedmissile frigates. To maintain the operational

effectiveness of those ships until the last ones retire (in

2018), the Navy wants to improve their engineering,

habitability, and combat systems. According to the 2003

FYDP, the Navy plans to spend about $200 million over

five years to, among many other things, replace engines,

install osmosis units, upgrade the CloseIn Weapons Sys

tem, and incorporate the Nulka decoy system on about

half of those ships. (Those last two upgrades would im

prove the frigate’s selfdefense capabilities.) The Navy

plans to increase spending in later years to upgrade all of

the Perrys. CBO estimates that the costs to upgrade all

of the frigates would total about $360 million, or slightly

more than $10 million per ship.

Developing Future Surface Combatants

Under the Navy’s plans, the next generation of surface

combatants would comprise three new ships: the DD(X)

destroyer, the littoral combat ship, and the CG(X) cruiser.

Like the Cold War generation of surface combatants, the

new generation would have several different ships to fulfill

different missions, but they would share as many tech

nological and design elements as possible to reduce costs.26

The principal difficulty in evaluating that effort is that

the Navy is still unclear about what missions it wants the

different ships to perform, how many of each type it

needs, or even what their capabilities would be.27

The DD(X) Destroyer. At the direction of the Bush Ad

ministration, the Navy canceled the DD21 Land Attack

Destroyer program on November 1, 2001. In its place,

the DD(X) program was established, which outlined the

Navy’s vision for a new generation of surface combatants,

to include the DD(X) destroyer, the littoral combat ship,

and eventually the CG(X) cruiser. Although the DD21

program consisted of 32 ships, it is not yet clear how many

DD(X)s would be bought. As of this writing, the Navy

appears to have settled on 16—one each for the 12

planned expeditionary strike groups in the Navy’s Global

Concept of Operations (see Box 1) and four more for war

time surge capability. 

Furthermore, how much the new destroyers might cost

is uncertain. The Navy had hoped that by the fifth DD21

in the production run, that ship would have cost less to

procure than an Arleigh Burke class guidedmissile de

stroyer, which costs about $1.2 billion per ship when

buying them at a rate of two per year. But if the Navy

bought only half as many DD(X)s at a rate of two per year,

it would be unlikely to achieve that goal. On the basis of

information from the Navy about how much it expects

the first DD(X) to cost (excluding nonrecurring design

elements), CBO estimates that the new destroyer would

have a price tag of about $1.9 billion per ship, on average,

for a 16ship run. In contrast, the Administration esti

25. David Brown, “Five Ticos in the Trash?” Navy Times (July 8,

2002), p. 14.

26. In the Navy’s current generation of surface warships, Spruance class

destroyers and Ticonderoga class cruisers share the same hull, and

the cruisers and Arleigh Burke class destroyers share the same pro

pulsion system and have similar combat systems.

27. For a thorough summary of the program, see Ronald O’Rourke,

Navy DD(X) Future Surface Combatant Program: Background and

Issues for Congress, CRS Report for Congress (Congressional Re

search Service, May 10, 2002).
CHAPTER ONE MODERNIZING THE SURFACE COMBATANT FORCE AND THE IMPLICATIONS FOR THE NAVY’S BUDGET 13

mates that the eight DD(X)s included in the 2004 FYDP

would cost an average of $1.3 billion apiece. (For a de

tailed explanation of CBO’s cost estimates for future sur

face combatants, see the appendix.)

Because the DD(X) destroyer would borrow much from

the DD21 program, more is known about it than about

the other two ships in the new generation. Like the DD

21, the DD(X) is intended to be a multimission ship,

emphasizing land attack. It would carry one or two new

155millimeter (mm) advanced gun systems developed

for the DD21, each of which can hurl rocketassisted

precisionguided projectiles to ranges of 100 miles. It

would also have a VLS battery of up to 128 cells capable

of firing various landattack and selfdefense missiles, a

large helicopter hangar, and a new integrated undersea

warfare suite. The DD(X) would also be able to operate

boats or unmanned vehicles from a special boat ramp.

The DD(X)’s final combat capability would be determined

primarily by its size. The DD21 was supposed to be an

extremely large combatant—upward of 16,000 tons—pri

marily because of two big advanced gun systems and large

600 to 750round magazines and because of the need to

increase its stealthiness. If the Navy decided to reduce the

size of the DD(X), it would lose one of the gun systems

and decrease the number of VLS cells. However, it is un

clear how a smaller number of reducedcapability DD(X)s

could meet the operational requirements set forth in the

DD21 program. Producing more DD(X)s would be one

option, but that clearly would not be as costeffective as

the current plan.

Much like the role that the Spruance class destroyer played

in the current generation of surface combatants, the

DD(X) is intended to be the “pathfinder” for technologies

that would be used in all subsequent ships of the next gen

eration. Three of those technologies are especially signifi

cant.

First, the Navy wants to equip the DD(X) with an all

electric powerdistribution and propulsion system instead

of the gasturbine systems on the current generation of

surface combatants. That new system would allow a ship

to use power far more efficiently. Gasturbinepowered

surface combatants devote most of the power they generate

to propulsion, and they cannot easily redirect that power

to other purposes. If the technical challenges can be over

come, an allelectric system will be able to divert power

effortlessly from propulsion to weapons and back again,

paving the way for the development of shipboard, elec

trically powered weapons, such as lasers or longrange elec

tromagnetic guns. 

Second, the DD(X) is intended to incorporate new hull

forms, materials, conformal antennas (antennas embedded

directly in the skin of a ship), and other design features

to give the ship a very small radar cross section, as well

as low magnetic, acoustic, and infrared signatures. Those

“stealth” features are designed to decrease the ship’s detect

ability and increase its survivability. 

Third, the DD(X) is supposed to introduce a host of auto

matic advances, especially in the area of damage control.

The Navy hopes that such advances will eventually allow

it to operate the new destroyers with a 70 percent smaller

crew than those of today’s destroyers.

In addition to expressing skepticism about the Navy’s

ambitious cost and crewing goals for the DD(X), critics

raise other questions about the program. First, it is not

apparent why the DD(X) needs to be as stealthy as the

Navy wants. Under the new Global Concept of Opera

tions (or Global CONOPs), the smaller littoral combat

ship would be the first to penetrate an opposing country’s

antiaccess network and defeat diesel submarines, mines,

and swarms of small missile attack boats that would

threaten successive U.S. forces. If that was true, the ma

jority of threats facing the DD(X) would already be dealt

with before it moved closer to shore, perhaps eliminating

the need to greatly reduce its acoustic and magnetic signa

tures. Decreasing the DD(X)’s radar cross section would

still seem to make sense since an enemy could engage ships

close to shore with longrange antiship cruise missiles

launched from far inland. But would the DD(X) need to

be substantially stealthier than the Arleigh Burke destroyer,

which is itself much stealthier than the Ticonderoga

cruiser?

A second criticism of the DD(X) program involves its em

phasis on land attack. Any surface combatant equipped

with the vertical launch system is capable of land attack,

and the Navy already has more VLS cells than it can afford

to fill with missiles (which is one reason that it feels it can
14 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

part with Spruance class destroyers). The DD(X)’s new

advanced gun system would differ from current guns and

have a much greater range and payload, offering the

Marines better naval gunfire support. But CBO is unaware

of any analysis that explains why the 63mile extended

range guided munition—which can be fired from up

graded 5inch, 62caliber guns and provides five times

the range of older 5inch guns—is not sufficient for naval

gunfire requirements, especially since the last large am

phibious assault conducted by the United States occurred

during the Korean War.

Using a stealthy ship to provide naval gunfire would not

seem to make sense because, to get the most out of its

range capabilities, the ship would have to operate close

to shore, where it would be detectable. (Stealth is discussed

in greater detail in Chapter 2.) If the threats that limited

the DD(X)’s closein operations had been eliminated, a

less stealthy ship equipped with 155mm guns, perhaps

one based on a commercial design, would serve equally

well. (Such a ship would essentially be a gun barge—an

offshore floating platform to provide gunfire support so

that Marine Corps units would not have to carry as much

artillery with them.)

The Littoral Combat Ship. As noted above, the DD21

program was intended to consist of 32 ships, for a steady

state surface combatant force of 116 ships. In effect, the

DD(X) program and the Global CONOPs modified that

plan to include 16 DD(X) destroyers and 56 littoral com

bat ships, for a steadystate force of 160 surface combat

ants. Under the 2004 FYDP, the Navy plans to order the

first LCS in 2005 and eight more by 2009.

The Navy has yet to answer many questions about the

LCS, primarily because the ship is still in the very early

stages of design and development. However, Navy officials

have stated that the LCS would be much smaller and faster

than the DD(X) and would be a focusedmission ship

rather than a multimission or singlemission ship. In other

words, the LCS would be designed modularly so that it

could be reconfigured fairly quickly to perform one of

three distinct missions: finding and sinking quiet diesel

submarines operating in crowded, noisy, and shallow

coastal waters; finding and neutralizing mines; and coun

tering swarm attacks by small, highspeed boats armed

with missiles.

Navy officials have begun to characterize the LCS as a kind

of “truck” capable of carrying various cargoes. The truck

—consisting of the ship’s hull, propulsion plant, crew

quarters, and basic defensive combat systems—would be

developed and acquired separately from its three associated

mission packages, or modules. The operators of the truck

and the modules would train separately, probably on shore

or on designated training vessels. When an LCS was slated

to deploy, whichever mission package was called for would

be pulled, put on the truck, and sent to sea.

Vice Admiral Phillip Balisle, head of Naval Sea Systems

Command and the former head of surface warfare for the

Chief of Naval Operations, used the analogy of an aircraft

carrier and its air wing to describe that LCS concept,

calling the carrier a “hollow” platform until the air wing

comes aboard.28 That analogy seems a bit misplaced,

however. Throughout an aircraft carrier’s training cycle

(which lasts between 12 and 18 months prior to a six

month deployment), the air wing is assigned to the carrier

and trains with it. Perhaps a better analogy, which some

Navy officials have used in discussions with CBO, is the

helicopter detachment routinely assigned to a surface

combatant before deployment. Although a helicopter

detachment trains with the surface combatant to which

it has been assigned, it is more flexible in that it can be

assigned to a different ship at the last minute, if necessary.

The detachment can even be transferred to another ship

during deployment if a mission requires it. Neither of

those options is possible with a carrier air wing.

Even that analogy, however, does not quite capture what

Navy planners are suggesting for the littoral combat ship.

Traditionally, the captain of a surface combatant “fights”

the ship, employing all of the weapons and systems at

hand. The commander of a helicopter detachment is just

another department head on a surface combatant, answer

ing to the ship’s captain. But who would “fight” the LCS

—the truck driver or the missionmodule commander?

Which of them would be ultimately responsible for the

safety of the ship? The mission commander could be

expected to take the lead because only he or she would

28. Vice Admiral Phillip M. Balisle, “Transforming the 21st Century

Surface Navy,” Armed Forces Journal International (September

2002).
CHAPTER ONE MODERNIZING THE SURFACE COMBATANT FORCE AND THE IMPLICATIONS FOR THE NAVY’S BUDGET 15

Box 2.

The Role of Helicopters in Countering Area-Denial Threats

Helicopters are the essential weapon system on a surface

combatant for defeating the threats posed by small,

quiet submarines; swarms of small boats; and mines.

Unmanned aircraft may perform those missions in the

future, but in the next 15 to 20 years—perhaps longer—

they are unlikely to replace the vital capability provided

by helicopters. Most of the Navy’s current surface com

batants are capable of embarking a mediumsized heli

copter (the H60 series by Sikorsky). Only the Flight

I/II Arleigh Burke destroyers cannot accommodate a

permanent helicopter detachment, although they could

support one for a few days at a time. 

Helicopters use a variety of sensors, including dipping

sonar, to detect a submarine. That information is trans

mitted to the surface combatant for processing. If a

target is identified and needs to be engaged, the job can

be done either by the helicopter (using antisubmarine

torpedoes) or by the surface combatant (using torpedoes

or antisubmarine rockets). Even if the helicopter cannot

get a precise enough fix on a submarine to target it with

a weapon, the helicopter’s presence may force the sub

to become still and quiet, thereby thwarting its mission.

Or the submarine may try to run, in which case the

superior dash speed of the helicopter will allow it to

keep after the submarine, forcing the sub to run down

its batteries. Particularly in shallow water, a helicopter

can fight submarines more effectively and with less risk

than a surface combatant with its own sonar systems

can do by itself.

Helicopters are also effective in countering swarms of

small boats by virtue of their speed and armament. As

a general rule of thumb, something trying to intercept

a small, fast boat needs to be about 50 percent faster

than its target. Thus, destroying a boat traveling at 80

knots requires the interceptor to have a speed of at least

120 knots. Only a helicopter, which can travel in excess

of 120 knots, provides enough speed to ensure a tactical

advantage. Furthermore, helicopters can destroy those

targets with their substantial payloads of missiles (such

as the Hellfire) and heavycaliber machine guns. For

example, in the Battle of Bubiyan Channel during the

Gulf War, two groups of allied helicopters annihilated

two convoys of Iraqi fastattack craft without any loss

to themselves or allied shipping.1

Helicopters are arguably less essential for mine clearing,

the only one of the three missions discussed here for

which unmanned underwater and surface vehicles can

also be used effectively. However, it will take years for

the Navy to finish developing and acquiring such

remote minehunting systems.

1. Robert Gardiner and Norman Friedman, Navies in the Nuclear

Age: Warships Since 1945 (Annapolis, Md.: Naval Institute Press,

1995), pp. 105107.

have the expertise to “fight” the ship. But how that would

work in actual combat situations is not clear—especially

if the truck driver remained responsible for the safety of

the ship and its crew.

Another key unknown about the LCS is its ultimate size

and configuration. Reports suggest that the Navy is ex

ploring designs that range in size from as little as 300 tons

of displacement to as much as 5,000 tons. (By compari

son, an Oliver Hazard Perry frigate displaces about 4,000

tons.) Most reports suggest a ship the size of a large cor

vette, on the order of 3,000 tons. That size ship provides

a good balance between payload and endurance. It can

deploy reliably overseas while having enough room for

acceptable crew facilities, and it is the smallest ship

deemed capable of supporting a single mediumsized

helicopter. Should the LCS be required to embark (that

is, carry, operate, and sustain) a mediumsized helicopter,

it would need a displacement of at least 4,000 tons.

Smaller vessels can carry helicopters, but the Navy’s Heli

copter Master Plan calls for only two types of helicopters

in the fleet—both variations of the large, multimission

SH60 Blackhawk. Introducing an entirely new class of

smaller helicopters to support the littoral combat ship
16 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

Box 3.

Providing Logistics Support to a Navy That Has Littoral Combat Ships

Expanding the size of the Navy’s fighting force to

include littoral combat ships would probably require

increasing the number of combat logistics ships (oilers,

ammunition ships, and multipleproduct vessels) needed

to keep that fleet resupplied. The size of that increase,

however, would depend heavily on whether those addi

tional logistics ships were operated by the activeduty

Navy or the Military Sealift Command and on their

capability. (For example, ships that carry three products

can do the same supply job as a larger number of dual

product ships, but they are more expensive.)

Today’s combat logistics force is composed of 34 ships:

13 oilers, seven ammunition ships, six combat stores

ships, and eight tripleproduct replenishment ships that

operate with aircraft carriers. The Navy estimates that

a 375ship fleet would need 42 combat logistics ships,

although it says that number is still being studied. 

That estimate is consistent with recent experience. In

1995, the Navy had 372 battle force ships, including

41 combat logistics ships, or 11 percent of the fleet.

Current numbers are almost the same. If today’s fleet

was scaled up to 375, the number of combat logistics

ships would be about 42—the same as the Navy’s

estimate. 

If, by contrast, the requirement for combat logistics

ships was based on the size of the surface combatant

force rather than the size of the entire fleet, a larger

number of resupply vessels would be necessary. A recent

historical average suggests that the Navy needs one

logistics ship for every 3.2 surface combatants. Thus,

a surface combatant force of 160 ships would require

50 replenishment ships. That measure is misleading,

however, because the combat logistics force is respon

sible for keeping the entire fleet resupplied at sea, not

just the surface combatant force.

In this analysis of the Navy’s plans for surface com

batants and alternative approaches to those plans, the

Congressional Budget Office included the costs of addi

tional combat logistics ships in its estimates where ap

propriate.

would entail considerable costs for training and operation

and support.29 (For more information about the role of

helicopters in helping surface combatants counter area

denial threats, see Box 2 on page 15.)

Yet another uncertainty surrounding the littoral combat

ship is how it would be used. The Global CONOPs sug

gests that the LCS would be employed in forward

deployed squadrons. However, the size of those squadrons

and whether they would be single mission (all carrying

the same type of mission module) or multimission (having

a mix of mission modules) are unknown. Also unclear is

how the LCS would be supported logistically. Some Navy

officials have suggested that littoral combat ships could

be refueled by the cruisers and destroyer with which they

would be operating. But what about food, munitions, and

spare parts? Would the squadrons require mother ships?

(The Navy does not appear to think so if the ships are in

the 3,000ton range.) If so, how would the mother ships

be protected? Under any circumstances, the large numbers

of LCSs that the Navy envisions buying would require

the service to expand its supporting combat logistics force

(for more details, see Box 3).

Of the many uncertainties surrounding the LCS, the big

gest question is whether the tactical concept of operations

for that ship makes sense. The Navy describes the LCS

as the “transformational” leg of the DD(X) program be

cause it is designed to provide “assured access” in the face

of future naval antiaccess networks. The theory is that the

smaller, speedier, and more stealthy LCS would enter an

29. Press reports suggest that the Navy wants the LCS to embark a

smaller helicopter but at least support an SH60sized aircraft. See

Nick Jonson, “Navy Issues Request for Proposals for Littoral

Combat Ship Model,” Aerospace Daily (August 16, 2002), p. 1.

In addition, Northrop Grumman Ship Systems unveiled a design

for the LCS that would allow it to support a mediumsized heli

copter for a few days but not embark one for an entire deployment.

See Nick Jonson, “Northrop Grumman Outlines Details of Littoral

Combat Ship Proposal,” Defense Daily (February 11, 2003).
CHAPTER ONE MODERNIZING THE SURFACE COMBATANT FORCE AND THE IMPLICATIONS FOR THE NAVY’S BUDGET 17

enemy’s littoral waters and eliminate mine, submarine,

and boat threats, allowing larger and less stealthy ships

to move closer to shore at acceptable levels of risk. Yet if

an enemy had overthehorizon targeting capability and

antiship cruise missiles effective enough to compel larger

combatants to remain far out at sea, could it not engage

smaller ships closer to its own shore and overwhelm their

small loads of shortrange selfdefense missiles and guns?

Conversely, if the larger combatants had to move closer

to shore to provide longerrange air and missile defense

for the LCSs, why could they not perform the antisub

marine warfare, antiboat, and countermine missions them

selves? Indeed, the three missions now assigned to the LCS

appear heavily dependent on helicopters (and, in the

future, unmanned systems); it is not clear why larger com

batants could not use those systems to similar effect.

Finally, there is the question of what the LCS will cost.

The Navy has provided some information to CBO about

the possible price tag of the LCS and its mission modules.

But it has not specified whether it plans to buy one

mission module of each type for every LCS it buys or a

total of 56 mission modules (one for each ship), divided

equally among the three missions. CBO estimates the

average cost of the LCS, with 1.25 mission modules per

ship, at about $350 million apiece (see the appendix for

more details). In comparison, the Navy estimates that the

first nine ships would cost an average of $200 million and

that the mission sets assigned to each ship would cost

about $180 million.

The CG(X) Cruiser. In the Navy’s plans, the third ship of

the DD(X) program will be a large multimission surface

combatant, which is expected (although not yet certain)

to use the same hull, propulsion plant, and basic combat

systems as the DD(X). The key difference is that the

CG(X) cruiser would be designed to provide longrange

fleet air defense, longrange defense against overland cruise

missiles, and theater ballistic missile defense. The CG(X)

might be equipped with an upgraded Aegis combat sys

tem, but more likely it would introduce an entirely new,

advancedgeneration combat system, including new radars

and moreadvanced missiles. Because of its mission, the

CG(X) would probably trade the DD(X)’s advanced gun

systems for additional VLS cells. CBO assumes that the

minimum VLS load for the CG(X) would be 200 cells.

In light of the Navy’s plans to modernize Ticonderoga

class cruisers, the need to begin building the CG(X) is not

pressing. Currently, the Navy thinks it may order the first

CG(X) in 2014, with that ship entering the fleet in 2019

or 2020. Such a timetable would cause a large overlap

between the first CG(X) and the retirement of the mod

ernized Ticonderogas, which would have an expected

service life of 40 years. In fact, the first of the 22 VLS

equipped Improved Ticonderogas, the Bunker Hill, would

not retire until 2026, and the last, the Port Royal, would

remain in service until 2034. According to press reports,

the CG(X) warships “will first complement and eventually

replace the 27 Ticonderogaclass Aegis cruisers” [emphasis

added], suggesting that the CG(X) production run might

be greater than 27 ships.30

A larger production run for the new cruiser would be

consistent with the Global CONOPs. That operating plan

calls for 24 ships—a single cruiser to be assigned to each

of 12 carrier strike groups and 12 expeditionary strike

groups. However, it also calls for nine surface action

groups to provide theater ballistic missile defense, with

two dedicated antiballisticmissile shooters and a single

antiair “shotgun” for protection. That goal suggests that

the Navy would need another 18 CG(X)s, for a total

production run of 42. In this analysis, CBO assumed that

the additional cruisers would be used to replace the early

flight Arleigh Burke destroyers on a oneforone basis.

(The first of those ships is scheduled to retire in 2026, if

it serves its full 35year expected service life. If midlife

upgrades extend that service life to 40 years, the first de

stroyer will not retire until 2031.) The average price for

the CG(X) would be $2.2 billion, CBO estimates (see the

appendix for details).

Budgetary Implications of

the Navy’s Plan

Analyzing the resources necessary to implement the Navy’s

plan for modernizing its surface combatant force is par

ticularly difficult because the Navy has not specified ex

actly how many surface combatants it wants or needs, nor

has it laid out its longterm modernization program in

30. Scott C. Truver, “U.S. Ship Debate: The Big Question,” Jane’s

Defence Weekly (April 24, 2002), p. 25.
18 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

20

40

60

80

100

120

140

160

180

DD-963

FFG-7

CG-47

DDG-51

DD(X)

LCS

CG(X)

Figure 3.

Inventory of Surface Combatants Under CBO’s Estimate of the Navy’s

160-Ship Plan, 2001-2025

Source: Congressional Budget Office.

Note: DD-963 = Spruance class general-purpose destroyer; FFG-7 = Oliver Hazard Perry class guided-missile frigate; CG-47 = Ticonderoga class guided-missile cruiser;

DDG-51 = Arleigh Burke class guided-missile destroyer; DD(X) = future general-purpose destroyer; LCS = littoral combat ship; CG(X) = future guided-missile

cruiser.

any detail. The 2004 FYDP provides details only through

2009. As a consequence, CBO developed two longterm

procurement plans, based on official information, to deter

mine the level of funding that the Navy thinks it needs

to modernize the surface combatant force. Comparing

those plans with past and projected funding levels suggests

that the Navy could face tradeoffs among different parts

of its fleet in coming years.

Determining the Navy’s Procurement Plans for

Surface Combatants Through 2025

CBO’s first procurement plan was based on information

contained in the June 2000 Report on Naval Vessel Force

Structure Requirements (referred to here as the 30Year

Shipbuilding Report), which is the Navy’s program of

record to the Congress for longterm ship procurement.

That report proposed a longterm procurement profile

aimed at maintaining a steadystate force of 116 surface

combatants, consisting of 27 Ticonderoga class cruisers,

57 Arleigh Burke class guidedmissile destroyers, and 32

DD21 landattack destroyers. At the end of their service

life, the 27 upgraded Ticonderogas would presumably be

replaced by 27 CG21 future cruisers, although that is not

certain.

CBO’s second shipbuilding plan—which more closely

reflects current Navy thinking—is drawn from public

statements by Navy officials, the 2004 FYDP, unofficial

sources, and the new Global Concept of Operations. CBO

assumed that to achieve the force structure goals implied

by the Global CONOPs, the Navy would modernize its

22 Improved (VLScapable) Ticonderoga cruisers and

would buy 16 DD(X) destroyers, 32 CG(X) cruisers (with

an eventual goal of 42), and 56 littoral combat ships.31

31. If the Navy decided to replace the Arleigh Burke destroyer with

the CG(X) (which would make far more sense than designing a

new ship at that point), the CG(X) production line would need

to be extended through at least 2028. CBO assumed that the Navy

would continue to buy the CG(X) and thus would purchase a total

of 32 between 2014 and 2025.
CHAPTER ONE MODERNIZING THE SURFACE COMBATANT FORCE AND THE IMPLICATIONS FOR THE NAVY’S BUDGET 19

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

1

2

3

4

5

6

7

8

DDG-51 DD(X) LCS CG(X)

Figure 4.

Annual Purchases of Surface Combatants Under CBO’s

Estimate of the Navy’s 160-Ship Plan

Source: Congressional Budget Office.

Note: DDG-51 = Arleigh Burke class guided-missile destroyer; DD(X) = future general-purpose destroyer; LCS = littoral combat ship; CG(X) = future guided-missile

cruiser.

The Navy would also modernize its frigates and purchase

62 Arleigh Burke destroyers as specified in the 2004

FYDP.32 Under that approach (referred to here as the

Navy’s 160ship plan), the inventory of surface combatants

would grow over the next 25 years until it reached a

steadystate level of 160 ships (see Figure 3).

The Navy’s 160ship plan defines the upper limit of the

service’s goals for surface combatants, and it conforms

most closely to Navy briefings about the Global CON

OPs. That concept of operations calls for 88 Aegis ships,

16 DD(X) destroyers, and 56 littoral combat ships. The

briefings do not provide a date when such a force would

exist, only its general outlines. To derive a procurement

plan for surface combatants, CBO used the information

in the 30Year Shipbuilding Report and updated it for

recent developments—particularly the intention to buy

16 DD(X)s instead of 32 DD21s, as well as 56 littoral

combat ships. (That procurement plan is shown in Fig

ure 4.) CBO then calculated the cost of the two ship

building plans using its cost estimates for the various types

of surface combatants. (For more details of those esti

mates, see the appendix.)

The Resource Implications of the Navy’s

Modernization Program for Surface Combatants

Although the surface combatant force is one of the

healthiest parts of the Navy in terms of its share of pro

curement dollars and its average age, the Navy’s 160ship

plan would require greater funding for that force than it

32. Essentially, CBO assumed that the DD(X) would be built on the

current schedule, with the lead ship purchased in 2005.
20 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

has received in recent years. Between 1990 and 2002, the

surface combatant force received an average of $3.6 billion

a year (in 2003 dollars) for ship construction, or 42 per

cent of the Navy’s total shipbuilding budget. With that

money, the Navy built an average of 3.5 surface combat

ants a year. That production level is a little more than the

3.4 ships per year required to maintain a force of 116

surface combatants in steady state. (In 2003, the Navy is

building only two surface combatants, spending about

$2.7 billion.) By contrast, sustaining a 160ship force in

steady state would require substantial increases in con

struction and funding—to 4.7 ships and about $5.2 bil

lion per year.

Thus, the current level of funding for surface combatants

cannot continue much longer if the Navy wishes to achieve

its new, higher force goals. CBO estimates that the Navy’s

160ship plan would entail spending an average of about

$5 billion annually on surface combatants between 2003

and 2010, for a construction rate of 4.0 ships a year—

more than the amount necessary to sustain a force of 116

ships but still less than the amount needed to achieve the

160ship force goals by 2025. Consequently, after 2010,

the surface combatant force would have to consume a far

larger share of the Navy’s shipbuilding budget. The Navy’s

160ship plan would spend an average of $6.2 billion a

year between 2011 and 2020 on surface combatants—or

about threequarters of today’s shipbuilding budget. With

out a significant rise in the Navy’s construction funding,

that level of spending would require tradeoffs with other

shipbuilding programs.

The numbers for surface combatants portray only part

of the overall budgetary challenge that the Navy is facing.

Other elements of the Navy will also need greater resources

if the service is to achieve a total force goal of 375 ships.

Although most of the planned increase in the fleet involves

surface combatants, reaching a 375ship Navy would

require maintaining at least the current force levels for

other types of ships. Between 2011 and 2020, the average

ship construction budget needed to build all of the aircraft

carriers, submarines, surface combatants, amphibious

ships, and support ships now planned would be almost

$17 billion a year, CBO estimates (see Table 3). That level

is roughly double the Navy’s average construction spend

ing of $8.5 billion a year over the 19902002 period. (The

2003 shipbuilding budget is only slightly more than $8

billion.)33

A Trade-Off Between Surface Combatants

and Attack Submarines?

What Table 3 shows is that unless the Navy is able to

devote significantly more money to ship construction, its

leaders will have to decide whether to pursue transforma

tion objectives in the surface combatant force or maintain

the attack submarine force near current levels. Over the

past 13 years, the Navy has been dramatically under

funding its attack submarine programs relative to the

amount needed to maintain that force at the level of 58

subs.34 The cumulative shortfall over that period in both

funding and construction relative to steadystate require

ments is about $34 billion and 15 submarines, respec

tively. Because the Navy did not buy many attack sub

marines during the 1990s, it must begin to purchase them

soon or accept that the force level will decline substan

tially.35

In comparison, the surface combatant force is far healthier,

at least with respect to past requirements. Based on the

force goal of 116 surface combatants—the requirement

that the Navy has operated under for the past six years and

that is still official—spending for surface combatants

between 1990 and 2002 showed a cumulative surplus of

$2 billion and about two ships relative to steadystate

needs. Based on the greatly expanded force requirements

called for in the Navy’s 160ship plan, however, funding

and construction over the 19902002 period fell short by

$19 billion and 15 ships.

33. That funding level does not include tactical aircraft, which will

also place substantial demands on Navy resources over the next

15 years.

34. The 1997 Quadrennial Defense Review set the force goal for attack

submarines at 50. That goal was raised to 55 several years later.

The current force level is 54, and the Bush Administration is

converting four ballistic missile submarines to a guidedmissile

configuration, which will allow them to perform conventional

missions. Thus, for the purposes of this analysis, CBO assumed

a force goal of 58 attack submarines.

35. See Congressional Budget Office, Increasing the Mission Capability

of the Attack Submarine Force (March 2002).
CHAPTER ONE MODERNIZING THE SURFACE COMBATANT FORCE AND THE IMPLICATIONS FOR THE NAVY’S BUDGET 21

Table 3.

Average Annual Construction Spending and Procurement for Navy Ships,

by Category, 1990-2020

Steady-State Cumulative Surplus

Actual Requirements or Shortfall (-)

Force Goal Annual (Based on 1997 Relative to Steady- Projected Annual

(Number Average, and 2001 QDR State Requirements, Averageb

Category of ships) 1990-2002 force goals)a 1990-2002 2003-2010 2011-2020

Construction Spending (Billions of 2003 dollars)

Surface Combatants 116 3.6 3.4c 2.0c 5.1 6.2

Attack Submarinesd 58 1.3 3.9 -34.1 4.2 6.3

Ballistic Missile

Submarinese 14 0.3 0.8 -7.1 0.6 0.4

Aircraft Carrierse 12 1.4 1.4 -0.5 2.0 2.1

Amphibious Ships 36 0.9 1.1 -1.8 0.6 0.9

Other 70 0.9 0.7 2.9 1.0f 1.0f

Total 306 8.5 11.3 -38.7 13.5 16.9

Procurement Quantity

Surface Combatants 116 3.5 3.4c 1.8c 4.0 6.2

Attack Submarinesd 58 0.6 1.8 -15.4 1.8 2.9

Ballistic Missile

Submarines 14 0.2 0.3 -2.3 0 0.1

Aircraft Carriers 12 0.2 0.2 -1.1 0.1 0.2

Amphibious Ships 36 0.8 0.9 -0.7 1.1 0.4

Other 70 2.2 2.1 1.7 2.3f 3.4f

Total 306 7.5 8.7 -16.0 9.2 12.7

Source: Congressional Budget Office.

Note: QDR = Quadrennial Defense Review.

a. The steady state represents the annual spending and purchases required to maintain the fleet at the level of the force goals, which are very close to current levels.

To determine steady-state purchases, CBO divided the Navy’s inventory of ships by the service life of each type of ship. Those annual purchases were then multiplied

by CBO’s estimate of the unit (per-item) cost for each type of ship.

b. CBO projection based on the Navy’s proposed 375-ship fleet, including 160 surface combatants.

c. If the requirement for surface combatants was 160 (reflecting the Navy’s 160-ship plan including about 60 littoral combat ships), the steady-state budget would

be $5.2 billion a year and the cumulative 1990-2002 shortfall would be $19 billion. Likewise, the steady-state procurement rate would be 4.7 ships per year, and

the cumulative shortfall would be a deficit of 15 ships.

d. These numbers represent a slight change from the force goals in the 1997 and 2001 QDRs. They assume 54 attack submarines and four Trident submarines converted

to a guided-missile configuration, whereas the 1997 QDR called for 50 attack submarines, and the 2001 QDR seemed to affirm a force goal of 55 attack submarines.

e. Includes funding for refueling overhauls.

f. Includes Maritime Prepositioning Force Future ships.

Other major components of the Navy are being funded

at levels closer to their steadystate requirements. Support

ships have actually received a surplus of funding over the

past 13 years and will make only modest demands on the

Navy’s budget relative to what they have been getting.

Aircraft carriers and amphibious ships have been under

funded but not dramatically so. Although ballistic missile

submarines experienced a large cumulative shortfall

between 1990 and 2002, it reflects the relatively young

age of those subs (13 years, on average) and their long

service life (42 to 44 years). The Navy need not order

another ballistic missile submarine until at least 2020.

2

Options for Managing the Transformation to

the Future Surface Combatant Force

Modernizing the surface combatant force need

not be as expensive a proposition as the program in the

30Year Shipbuilding Report or the Navy’s 160ship plan

would be. This chapter presents three alternatives for

structuring the surface combatant force, each of which

would cost no more than what the Navy is spending today

on surface combatants. All of the options would result in

a larger surface combatant force in 2025 than exists now

but a smaller force than the one envisioned in the Navy’s

160ship plan. 

Each of these options emphasizes different tradeoffs be

tween keeping the current force of surface combatants and

transforming it over 25 years. The first option would make

maximum use of the stillcapable Cold Wargeneration

ships that are in the fleet today. Conversely, the second

option would accelerate the process of incorporating next

generation ships into the surface combatant force by

retiring many of those Cold Warera ships before the end

of their expected service lives and slightly speeding up

development of the CG(X) cruiser. The third option

would procure smaller numbers of nextgeneration

cruisers, destroyers, and littoral combat ships but would

use multiple crews on them, thus significantly increasing

the amount of forward presence each individual ship could

provide.

In developing the different force structures in these op

tions, the Congressional Budget Office restricted the fund

ing that would be allocated for surface combatants to an

average of $6.6 billion a year (in 2003 dollars) for procure

ment and direct operation and support costs between 2003

and 2025.1

 Both procurement costs and operation and

support costs should be considered because they are related

and because CBO’s force structures make explicit trade

offs between them. Retaining older ships would require

higher operation and support costs compared with retiring

those ships and speeding up the procurement of new sur

face combatants. (The discussion in Chapter 1 of the costs

of the Navy’s 160ship plan addressed only procurement

costs.) CBO chose the $6.6 billion figure because that is

what the Congress appropriated to the Navy for its surface

combatant force in 2002, expressed in 2003 dollars. It also

represents about the amount of money needed to sustain

and operate today’s surface combatant force in steady state

(that is, at the current size indefinitely). 

This chapter describes the different force structure options

in detail. The next chapter addresses how capable those

force structures would be in both peacetime and wartime

compared with today’s surface combatant force and with

the forces implied by the Navy’s 160ship plan and the

30Year Shipbuilding Report.

Option I: Delay the Transition to

Next-Generation Ships by Making

the Most of the Existing Fleet

Under this approach, the Navy would emphasize keeping

its existing ships through the end of their notional ex

1. Under Option III, the cost of building additional training facilities

is included in the $6.6 billion.

CHAPTER
24 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

Table 4.

Summary of Program Changes and Assumptions Under Alternative

Force Structures Through 2025

Program Navy’s 160-Ship Plan Option I Option II Option III

DD-963 Retires all ships by 2006 Retains all active ships

for 35-year service life; 

upgrades engineering

and self-protection

systems

Retires all ships by 2006 Retires all ships by 2006

FFG-7 Modernizes all ships;

last of the class retires

in 2018

Modernizes all ships;

last of the class retires

in 2018

Cancels modernization 

program; last of the class

retires in 2010

Modernizes all ships; last

of the class retires in 2018

CG-47 Retires first five ships

by 2006; fully converts the

other 22 ships (35-year 

service life)

Fully converts all 27 ships

(40-year service life)

Retires first five ships

by 2006; retires nine

more by 2014; fully 

converts the other 13 ships

(40-year service life)

Retires first five ships

by 2006; fully converts the

other 22 ships (40-year 

service life)

DDG-51 Buys 62 ships 

(35-year service life, no 

midlife upgrades)

Buys 64 ships 

(35-year service life, no

midlife upgrades)

Buys 61 ships 

(35-year service life, no

midlife upgrades)

Buys 61 ships 

(35-year service life, no

midlife upgrades)

DD(X) Buys 16 ships starting in

2005 (35-year service life)

Cancels program Buys 12 ships starting in

2005 (35-year service life)

Buys eight ships starting

in 2006 (35-year service

life); uses multiple crews

LCS Buys 56 ships starting in

2005 (25-year service life)

Cancels program Buys 30 ships starting

in 2005 (25-year service

life)

Buys 28 ships starting

in 2009 (25-year

service life)

CG(X) Buys 32 ships starting

in 2014; total plan of 42

(35-year service life)

Buys 12 ships starting

in 2019; total plan of 24

(35-year service life)

Buys 16 ships starting

in 2012; total plan of 24

(35-year service life)

Buys 15 ships starting

in 2018 (35-year

service life)

FFG(X) n.a. Buys 40 ships starting

in 2008 (30-year 

service life)

n.a. n.a.

Source: Congressional Budget Office.

Note: n.a. = not applicable.

pected service lives rather than retiring some of them early,

as under current plans. That approach would make the

most of the legacy fleet (capital assets the Navy already

has) and would ease the shortage of ships that some ad

mirals argue now exists.2

 At the same time, the Navy

would start the transition to the next generation of surface

combatants by building a different ship from the ones

currently planned.

With respect to specific programs, the Navy would up

grade all 27 Ticonderoga class (CG47) cruisers and keep

them to the end of their extended 40year service lives (see

Table 4). It would also retain all 17 Spruance class

(DD963) destroyers and 33 Oliver Hazard Perry class

(FFG7) frigates, upgrading their systems as necessary.

It would buy 64 Arleigh Burke class (DDG51) destroyers

2. See, for example, David Brown, “Fewer Ships: Biggest Problem

for SurfLant,” Navy Times (August 5, 2002), p. 20; Bradley

Peniston, “Fleet’s Too Small, Say Sixth’s Murphy,” Navy Times

(November 1, 1999); and “Mullen: ‘Virtual Presence Doesn’t Hack

It,’” Defense News (March 15, 1999), p. 8.
CHAPTER TWO OPTIONS FOR MANAGING THE TRANSFORMATION TO THE FUTURE SURFACE COMBATANT FORCE 25

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

20

40

60

80

100

120

140

160

180

DD-963

FFG-7

CG-47

DDG-51

CG(X)

FFG(X)

Total Inventory Under

Navy's 160-Ship Plan

Figure 5.

Inventory of Surface Combatants Under Option I, 2001-2025

Source: Congressional Budget Office.

Note: DD-963 = Spruance class general-purpose destroyer; FFG-7 = Oliver Hazard Perry class guided-missile frigate; CG-47 = Ticonderoga class guided-missile cruiser;

DDG-51 = Arleigh Burke class guided-missile destroyer; FFG(X) = future guided-missile frigate; CG(X) = future guided-missile cruiser.

(two more than under the Navy’s 160ship plan) and

cancel the DD(X) destroyer and littoral combat ship pro

grams. To replace legacy destroyers and frigates, the Navy

would instead build 40 new frigates that were more cap

able than the littoral combat ship but much smaller and

less expensive than the DD(X). (To be consistent with the

DD(X)family terminology, this study refers to the new

frigate as the FFG(X).) In addition, because Ticonderoga

cruisers would stay in service longer, the CG(X) program

would be delayed for five years. With those changes, the

steadystate surface combatant force would number 24

cruisers, 64 destroyers, and 40 frigates, for a total of 128

ships.

Under this approach, the surface combatant force would

be much larger through 2013 than under the Navy’s 160

ship plan (see Figure 5). The force would reach 134 surface

combatants in 2009 as new Arleigh Burke destroyers were

commissioned and older ships were retained. Once the

Spruance destroyers and Perry frigates began reaching the

end of their full service lives, however, the surface combat

ant force would shrink before the new frigate began

boosting its numbers again. From 2014 on, this option

would produce a smaller surface combatant force than the

Navy’s 160ship plan would. Moreover, for a few years

(between 2015 and 2018), the force would fall below the

current size of 115 ships.

Any change in production plans for surface combatants

would have implications for the industrial base—the two

U.S. shipyards currently capable of building large surface

combatants: Bath Iron Works, owned by General

Dynamics, and Ingalls Shipbuilding, owned by Northrup

Grumman Ship Systems. The 2003 Future Years Defense

Program envisioned building no more than two surface

combatants a year through 2007. (The 2004 FYDP, in

contrast, would produce between one and seven surface

combatants a year through 2009.) In general, this option

would continue to build two surface combatants a year

through 2009 (see Figure 6) as well as pursue the full con

version program for Ticonderoga cruisers and substantial

upgrades to Spruance destroyers. Those efforts might

prove to be just enough work to keep the two shipyards

in business, assuming that the amphibious ships called

for in the 2004 FYDP were built as well. The period

through 2009, while surface combatants were being built

at relatively low rates, could prove difficult for Bath Iron

Works. After that, when procurement rates for new surface
26 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

1

2

3

4

5

6

7

8

DDG-51 FFG(X) CG(X)

Figure 6.

Annual Purchases of Surface Combatants Under Option I, 2001-2025

Source: Congressional Budget Office.

Note: DDG-51 = Arleigh Burke class guided-missile destroyer; FFG(X) = future guided-missile frigate; CG(X) = future guided-missile cruiser.

combatants increased to three or four a year, the shipyards

would be on a sounder footing. Overall, this option would

build an average of 2.7 ships per year between 2003 and

2025.

Average Annual Costs

This approach would cost much less than either the

program in the 30Year Shipbuilding Report or the Navy’s

160ship plan. From 2003 through 2010, the Navy would

spend an average of $6.6 billion a year on procurement

and operation and support costs (see Table 5). That

amount would drop slightly, to $6.1 billion a year, be

tween 2011 and 2020. But between 2021 and 2025, when

Ticonderoga cruisers would finally begin to retire and have

to be replaced, average annual costs would rise to $7.9

billion. Nevertheless, those costs are lower than under the

Navy’s 160ship plan, which would require average annual

spending of $8.3 billion, $9.5 billion, and $10.3 billion,

respectively, for those same periods.

The Navy argues that keeping older ships, particularly

Spruance destroyers, around longer is not costeffective

because those ships are more expensive to operate than

either an Arleigh Burke destroyer or an Oliver Hazard

Perry frigate. If the Navy kept the Spruances and invested

$100 million per ship to improve their reliability and self

defense capabilities, the amortized annual cost of retaining

those ships in the fleet for a 35year service life would be

about $45 million apiece. That amount compares favor

ably with the costs of buying and operating a new Arleigh

Burke destroyer, which would total about $60 million a

year—although the Arleigh Burkes are much more capable

ships. A littoral combat ship would cost about $30 million

a year to buy and operate, assuming a 25year service life.
CHAPTER TWO OPTIONS FOR MANAGING THE TRANSFORMATION TO THE FUTURE SURFACE COMBATANT FORCE 27

Table 5.

Average Annual Spending for

Procurement and Operation and

Support, 2003-2025

(In billions of 2003 dollars)

Force Structure

2003-

2010

2011-

2020

2021-

2025

2003-

2025

Navy’s 160-Ship Plan 8.3 9.5 10.3 9.3

Option I 6.6 6.1 7.9 6.6

Option II 7.1 6.3 6.7 6.6

Option III 7.1 5.6 8.2 6.6

Source: Congressional Budget Office.

Note: Option I would delay the transition to next-generation surface combatants

by making the most of the existing fleet. Option II would accelerate the

transition to next-generation ships by retiring much of the existing force

early. Option III would buy fewer next-generation ships by assigning

multiple crews to new ship classes.

Is one Spruance class destroyer worth 1.5 littoral combat

ships? That, in effect, is the relative costeffectiveness

decision that the Navy has made in favor of the LCS.3

The FFG(X)

The most significant difference between this option and

the Navy’s plan is that this option would cancel the

DD(X) and LCS programs. If spending on the surface

combatant force is restricted to existing budget levels, the

Navy cannot afford both new ships. Moreover, as dis

cussed in Chapter 1, it is not clear that either the DD(X)

or the LCS is what the Navy will need in the future.

Rather than replace Cold Wargeneration destroyers and

frigates with 16 DD(X) destroyers and 56 focusedmission

but modular littoral combat ships, this option would

design and buy 40 multimission frigates.

Those FFG(X)s would be modeled in part on Spain’s

F100 guidedmissile frigates.4

 The F100, which went

into service last year, is a stateoftheart frigate that can

perform a variety of missions, including antisubmarine,

antiship, and antiair warfare. The F100 is equipped with

a single 5inch, 54caliber gun and 48 VLS cells, which

can carry 96 area airdefense missiles, point airdefense

missiles, landattack missiles, and antisubmarine missiles.5

The ship is also equipped with the Aegis combat system

and can embark two helicopters. It has a range of 5,000

nautical miles at 18 knots and is capable of a sustained

speed as high as 27 knots.

The FFG(X) created under this option would not be

Aegiscapable; instead, the money saved from not buying

the Aegis system would be used to introduce the new all

electric propulsion system, reduce the ship’s signature,

decrease crew size through improvements in automation,

and introduce a littoral antisubmarine warfare (ASW)

suite. Those improvements would more than offset the

cost of the Aegis system. In addition, the FFG(X) would

be incorporated into the Navy’s sensor and communica

tion networks.

This kind of frigate would not be nearly as fast as the lit

toral combat ship is supposed to be, but it would be much

more capable and have greater endurance. Moreover, it

is not clear that the Navy needs a very high speed ship to

perform the missions that the Navy has in mind if the ship

is capable of embarking helicopters (see Box 2 on page

15). This frigate could operate effectively as part of a larger

group of ships or independently, as long as it was not ex

pected to encounter a particularly intense air threat.6

 The

3. As a point of comparison, the Navy’s submarine community has

moved in the opposite direction, extending the service lives of most

Los Angeles class attack submarines from 30 to 33 years and of

Trident ballistic missile submarines from 30 to 42 (or more) years.

4. Germany’s Sachsen class (Type 124) guidedmissile frigate is

another good example. Interestingly, a German industry consortium

is testing the feasibility of putting a 155millimeter gun on the

Type 124. See Christopher F. Foss, “Artillery System Targeted

for Ships,” Jane’s Defence Weekly (February 12, 2003).

5. An area airdefense missile, such as the Standard Missile, has a range

of about 40 nautical miles and thus can reach a wider area to defend

a group of ships from attack. A point airdefense missile, such as

the Evolved Sea Sparrow, has a much shorter range and is designed

to destroy incoming missiles that have “leaked” through outer

defenses. Four of those missiles are loaded in “quad packs” in a

single VLS cell.

6. For a critique of the littoral combat ship and an argument for more

multimission warships, see Lieutenant Commander Richard

Brawley, “Streetfighter Cannot Do the Job,” Proceedings, U.S.

Naval Institute (October 2002), pp. 6669.
28 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

average cost of the FFG(X) would be about $700 million,

CBO estimates. (For more details about that estimate, see

the appendix.) By comparison, Spain’s Aegiscapable F

100 frigate reportedly costs about $600 million.7

The Risks Posed by Future Threats

This option’s approach is based on two premises: that

serious areadenial threats will not materialize in the next

10 to 15 years and that a large legacy force can handle any

nearterm threats that do arise. That approach makes sense

if one believes, for example, that the nation’s principal

military problem in the near term will be the war on ter

rorism, which will require a large number of surface com

batants to be in many places at once, performing a variety

of missions. An especially important mission may be to

conduct more and more maritime interception and escort

operations to find terrorists and protect shipping.

In such an environment, the multimission FFG(X) would

be more versatile than the LCS and at least as effective,

if not more so. Designed to accommodate both helicopters

and future unmanned systems as well as a littoral ASW

suite, the FFG(X) would represent a good combination

of the large DD(X) and the smaller LCS.

Critics might argue that this approach would make more

of the surface combatant force vulnerable to threats from

dieselelectric submarines, small boats armed with antiship

cruise missiles, and mines than under the Navy’s 160ship

plan. However, this force would probably be more vulner

able only to antiship cruise missiles; it would be equally

as vulnerable to submarines and mines as the currently

planned force would be. Dieselelectric submarines find

their targets largely through acoustic sonars, and the Spru

ance class destroyers that this option would retain have

a relatively quiet acoustic signature. Mines would pose

the same level of threat to a Spruance destroyer as to a

DD(X) destroyer. But the much larger radar cross section

of today’s surface combatants would make it far easier for

targeting radars to identify the coordinates of those ships

than of much stealthier vessels.

The central question in regard to that concern is, How

capable will potential opponents of the United States be

in finding surface ships and targeting them with cruise

missiles? So far, potential opponents have yet to demon

strate an operationally effective ability to target U.S. naval

forces 150 to 200 miles from shore. Moreover, they would

have to overcome many technological hurdles to develop

that ability.

A different scenario would be much more challenging for

this option’s surface combatant force. If, around 2010,

a Middle Eastern country blockaded the Persian Gulf and

the U.S. Navy needed to force its way into the Strait of

Hormuz, cruise missile attacks at relatively short ranges

could pose a grave threat. None of this option’s new

stealthy frigates would be in the fleet yet, and the only way

the Navy could ensure the safety of its ships would be to

attack the enemy’s cruise missile sites and boats first.

However, the Navy’s 160ship force would confront the

same problem: few of its stealthy ships would be com

missioned by 2010, and it would have fewer ships of other

types to conduct operations than under this option. If the

same scenario occurred in 2020, the odds would improve

for both fleets, although the Navy’s 160ship force would

have more nextgeneration ships than the force resulting

from this approach.

In summary, the risks to the surface combatant force in

certain scenarios would arguably be somewhat greater

under this option than under alternative approaches that

emphasize introducing nextgeneration surface combatants

more quickly. But, as Option II will illustrate, those other

approaches risk not having enough ships over the next 10

years for all of the other jobs that the Navy is called on

to perform.

Option II: Accelerate the Transition

to Next-Generation Ships by Retiring

Much of the Existing Force Early

Under this option, the Navy would hasten the introduc

tion of new ships into the fleet—which some admirals say

they need—at the cost of reducing the number of legacy

surface combatants. This approach would enable the pro

grams of the Navy’s 160ship plan to fit within the budget

constraint of $6.6 billion annually, on average, between

7. A.D. Baker III, The Naval Institute Guide to Combat Fleets of the

World, 20022003: Their Ships, Aircraft, and Systems (Annapolis,

Md.: Naval Institute Press, 2002), pp. 737738.
CHAPTER TWO OPTIONS FOR MANAGING THE TRANSFORMATION TO THE FUTURE SURFACE COMBATANT FORCE 29

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

20

40

60

80

100

120

140

160

180

DD-963

FFG-7

CG-47

DDG-51

CG(X)

LCS

Total Inventory Under

Navy's 160-Ship Plan

DD(X)

Figure 7.

Inventory of Surface Combatants Under Option II, 2001-2025

Source: Congressional Budget Office.

Note: DD-963 = Spruance class general-purpose destroyer; FFG-7 = Oliver Hazard Perry class guided-missile frigate; CG-47 = Ticonderoga class guided-missile cruiser;

DDG-51 = Arleigh Burke class guided-missile destroyer; DD(X) = future general-purpose destroyer; LCS = littoral combat ship; CG(X) = future guided-missile

cruiser.

2003 and 2025. The result would be a surface combatant

force that was substantially smaller than any other force

structure discussed in this study. This approach is built

on the premise (which CBO assumes for the purposes of

this option) that, to the extent that networkcentric war

fare increases the combat capabilities of a given group of

ships, a smaller number of new ships built with such war

fare in mind will probably be more capable than a larger

number of older ships, all other factors being equal.

With respect to specific programs, this option would

follow the Navy’s plan to retire all Spruance class destroy

ers by 2006 (see Table 4 on page 24). In addition, it would

retire all Oliver Hazard Perry class frigates by 2010 and

upgrade only 13 of the 27 Ticonderoga class cruisers. The

first five cruisers would be retired by 2006, as in the

Navy’s 160ship plan, and an additional nine would be

retired by 2014 to save money. The 13 upgraded Ticon

derogas would have 40year service lives.8

 This option

would also halt the production run of Arleigh Burke de

stroyers at 61. In regard to nextgeneration ships, it would

accelerate the CG(X) cruiser by two years but would buy

only 16 of the total 24 within the 2025 time frame. This

option would also purchase only 12 DD(X) destroyers,

eliminating the four dedicated to wartime surge. It would

begin procuring the littoral combat ship in 2005 but, for

affordability reasons, would buy only 30 of them.

Overall, Option II would trade off legacy ships in the near

term for a more modern, more capable force in the longer

term. It would implicitly accept nearterm operational

risk in order to reduce operational risk when areadenial

threats were likely to be more severe. For example, in the

war on terrorism, far fewer ships would be available for

maritime interception, escort, or forward presence. By

2009, the surface combatant force would have shrunk to

just 84 ships, before new ships, especially the LCS, began

to increase the fleet size (see Figure 7). By 2025, the surface

combatant force would number 123 ships, eight more

than today’s fleet. Assuming that the Arleigh Burkes were

eventually replaced on a oneforone basis, the steadystate

force under this option would ultimately total 125 ships.

8. Moremodest upgrades to improve the selfdefense capabilities of

the ships would still be made.
30 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

1

2

3

4

5

6

7

8

DDG-51 DD(X) LCS CG(X)

Figure 8.

Annual Purchases of Surface Combatants Under Option II, 2001-2025

Source: Congressional Budget Office.

Note: DDG-51 = Arleigh Burke class guided-missile destroyer; DD(X) = future general-purpose destroyer; LCS = littoral combat ship; CG(X) = future guided-missile

cruiser.

Compared with Option I, this approach would pose fewer

risks for the industrial base. It would generally build three

or more surface combatants a year starting in 2005,

limiting the period of constructing two surface combatants

annually to only a few years (see Figure 8). Overall, this

option would build an average of 2.8 ships per year during

the 20032025 period.

Average Annual Costs

As with Options I and III, this force structure would fit

within the budgetary constraint of an average of $6.6

billion a year for procurement and operation and support

costs; therefore, it would cost much less than the Navy’s

160ship plan would. Through 2010, the Navy would

spend an average of $7.1 billion a year on procurement

and operation and support under this approach (see

Table 5 on page 27). That figure would be lower in later

years: an average of $6.3 billion annually between 2011

and 2020 (when the Navy will need to invest heavily in

attack submarines) and $6.7 billion a year between 2021

and 2025. Because this option would buy more next

generation ships earlier, its average annual costs between

2021 and 2025 would be lower than Option I’s. 

The Role of Stealth in Navy Warships

This option would yield a more capable nextgeneration

force than the other options analyzed in this chapter,

especially with respect to stealth. But do surface ships need

to be stealthy? The answer depends on assumptions about

what navies should do. In peacetime, the United States

keeps about 30 percent of its naval forces forward de

ployed to exert political influence overseas by reassuring

friends and deterring enemies. For the types of missions

performed during peacetime—such as conducting mari
CHAPTER TWO OPTIONS FOR MANAGING THE TRANSFORMATION TO THE FUTURE SURFACE COMBATANT FORCE 31

time interception, enforcing sanctions, or engaging with

allies—stealth is of little importance.

Stealth achieves its real value on the rare occasions when

the Navy must go to war. That value occurs on two levels:

operational and tactical. Operational stealth refers to

whether an enemy can locate and track a ship. (Such op

erational stealth preserves the possibility of tactical sur

prise, making it more difficult for the enemy to focus its

defenses.) Tactical stealth refers to the ease with which

a ship can be targeted and destroyed, especially in the final

antiship engagement.

The Logic of Operational Stealth. Buying operationally

stealthy ships is a competitive strategy that seeks to impose

costs on potential enemies who want to restrict the Navy’s

freedom of action. By making its ships difficult to find,

the Navy in effect forces adversaries to invest heavily in

overthehorizon detection and targeting systems, such

as spacebased radars or infrared systems (which might

also be put on highaltitude aircraft or unmanned aerial

vehicles).

Nevertheless, there are limits on what stealth in surface

ships can achieve. For example, a ship with a conventional

hull form will always be detectable to an enemy using the

appropriate technology. Such a ship leaves a substantial

wake (a Vshaped pattern trailing behind it) that an oppo

nent with a sophisticated spacebased or aircraftbased

synthetic aperture radar can detect. Although different

hull forms can substantially reduce the wake of a ship,

even in 2030, most of the Navy’s large warships—such

as aircraft carriers, amphibious ships, destroyers, and logis

tics support ships—will still have a conventional hull.9

Depending on which opponents the United States expects

to face over the next 30 years, operational stealth may be

either a worthwhile investment or a shortlived, wasting

asset. It is doubtful that small, relatively poor adversaries

could develop or buy the sophisticated systems needed

for a comprehensive overthehorizon detection and target

ing capability. Richer and more technologically sophisti

cated opponents might decide to make that investment.

If so, the question becomes, to what extent is the invest

ment in operational stealth more or less costly to the

United States than an opponent’s investment in overthe

horizon detection systems is to itself? The answer may

hinge in part on future advances in computers and sensor

technology. By spending money to make new ships

operationally stealthy, the Navy is betting that improve

ments in sensors and information technology (such as

computer processing power) will not come fast enough

to degrade the value of stealth fairly early in the life of a

ship class.

The Logic of Tactical Stealth. In a wartime environment,

a stealthy ship will have a much better chance of surviving

antiship engagements than a nonstealthy ship will. The

value of that stealth derives from the way in which a ship

defends itself against radarguided antiship cruise missiles.

A surface combatant’s defenses include a low radar cross

section that makes it difficult for a radarguided antiship

missile to find the ship, decoys that provide alternative

targets for incoming missiles, medium and shortrange

selfdefense missiles designed to intercept antiship missiles,

and closein, rapidfire projectile weapon systems em

ployed as the defense of last resort. 

Reducing a ship’s radar cross section works in tandem with

decoy systems. For example, if a 10,000ton ship can be

made stealthy enough to look like a 3,000ton ship, it is

harder to distinguish from nonmilitary traffic. If the chaff

cloud a decoy puts up can look larger than a 3,000ton

ship, the homing radar of an incoming antiship missile

will target the “larger” vessel.10 (For that reason, decoys

are not as useful with ships that have very large radar cross

sections.) Similarly, reducing a ship’s magnetic signature

will allow it to thwart many types of mines, and a very

low acoustic signature makes the ship less detectable by

submarines.

9. Even if the Navy produces new classes of ships with hull forms that

reduce their wakes, how will those ships operate? If ships without

large wakes are supported by, operate with, or are resupplied by

ships that have wakes, they will all be detectable. Furthermore,

even a ship with a reduced wake may be detectable if an opponent’s

synthetic aperture radar is powerful enough (down to a onefoot

resolution).

10. A chaff cloud is composed of thousands of bits of metal launched

adjacent to a ship to make an incoming missile think the cloud

is a better target.
32 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

New weapon systems could pose problems in the future

for ships that were tactically stealthy. Antiship missiles

with imaging warheads would not be fooled by the decoy

systems that the Navy has now or plans to acquire.11 Such

weapons would aim for targets that matched the images

in their onboard computer libraries. Chaff clouds or other

decoys would not present an image of a ship to an in

coming imaging warhead. The United States is developing

and planning to acquire the AIM9X airtoair missile.

Because that missile will have an imaging warhead, flares

will not be a useful defense against it. A similar warhead

for an antiship missile has not yet been developed, but it

may be only a matter of time before the new technology

in airtoair weapons is applied to antiship weapons.

As is the case with operational stealth, the type of oppo

nents the Navy expects to face over the next 30 years is

an important factor in decisions about investing in tactical

stealth. Whether many of the United States’ potential

enemies could afford those new weapon systems in quan

tity is uncertain. And even if an adversary could afford

to buy them, it might not be able to operate them. Still,

a rich, technologically sophisticated opponent might

eventually find it relatively easy to overcome the tactical

stealthiness of future Navy warships.

Unless the threat posed by antiship cruise missiles and

dieselelectric submarines is completely eliminated, a ship

providing gunfire support to ground forces will be detect

able and targetable by the sound of its guns. The new

DD(X) destroyer is slated to carry 155millimeter guns

to provide the Marine Corps with naval fire support. An

enemy could detect and locate a DD(X) by the firing of

its guns, using a series of microphones along the shore and

triangulating the ship’s position.

This discussion of the value of stealth is not intended to

be conclusive. It is meant to raise questions because—as

this option illustrates—the cost of a stealthier fleet is high.

On the one hand, does it make sense to accelerate the

transition to nextgeneration ships, throwing away many

capable ships in the process, when few countries appear

to be investing heavily in antiaccess technologies? On the

other hand, if the Navy delays that transition too long,

will a potential opponent be able to build an antiaccess

network far more quickly than the Navy can construct

and field highly stealthy, nextgeneration warships? That

tradeoff is one of the key issues that the Navy will con

front over the next two decades. Clearly, the Bush Admin

istration’s choice is to speed up the transition to stealthy,

nextgeneration surface combatants. 

Option III: Buy Fewer Next-Generation

Ships by Assigning Multiple Crews

to New Ship Classes

Under this approach, the Navy would transform the sur

face combatant force in large part through operating its

ships differently. By employing three crews to operate two

ships, the Navy could provide as much forward presence

as under its 160ship plan but with a smaller force and

for much less money. The Navy is experimenting with

a similar crewing concept on some current ships. Never

theless, for the purposes of this analysis, CBO restricted

the new crewing concept to the future ship classes—the

DD(X), CG(X), and littoral combat ship—on the premise

that designing new ships to accommodate multiple crews

would be easier than imposing that change on existing

ships.

The 2001 Quadrennial Defense Review implied that trans

formation should help the U.S. military increase its over

seas presence; that increase was mandated by the subse

quent Defense Planning Guidance. Some independent

analysts have explicitly argued that the Navy should ex

amine different crewing concepts for its ships as part of

the overall naval transformation effort.12

11. Antiship missiles with imaging warheads are also called coherent

seeker warheads or warheads with patternmatching, automatic

target recognition.

12. See Department of Defense, Quadrennial Defense Review Report

(2001); and Ronald O’Rourke, “Transformation and the Navy’s

Tough Choices Ahead: What Are the Options for Policy Makers?”

Naval War College Review (Winter 2001). In addition, the cost and

operational effectiveness analysis of the Navysponsored Surface

Combatant 21 program (the predecessor to the DD(X) program)

and the Surface Combatant Force Level Study II both assess,

without rejecting, a multiplecrewing concept for future surface

combatants.
CHAPTER TWO OPTIONS FOR MANAGING THE TRANSFORMATION TO THE FUTURE SURFACE COMBATANT FORCE 33

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

20

40

60

80

100

120

140

160

180

DD-963

FFG-7

CG-47

DDG-51

CG(X)

LCS

Total Inventory Under

Navy's 160-Ship Plan

DD(X)

Equivalent Peacetime Force Level

(Adjusted for multiple crewing)

Table 6.

Estimated Operating Costs for

Future Classes of Navy Ships Using

Single Crews or Multiple Crews

(In millions of 2003 dollars)

Ship Class

SingleCrewedMultipleCrewed

DD(X) Future Destroyer 20 26

Littoral Combat Ship 14 16

CG(X) Future Cruiser 27 34

Source: Congressional Budget Office using data from the Navy’s Visibility and

Management of Operating and Support Costs (VAMOSC) database.

Like the Navy’s 160ship plan, this option would retire

all Spruance class destroyers by 2006; modernize all Oliver

Hazard Perry class frigates, retiring them by 2018; and

convert all but the first five Ticonderoga cruisers, which

would be retired by 2006 (see Table 4 on page 24). How

ever, this option would buy 61 Arleigh Burke destroyers

instead of 62. More important, it would buy both the

DD(X) and the littoral combat ship in reduced numbers:

eight and 28, respectively. It would also delay the first

purchase of the CG(X) until 2018 and then buy only 15

of them. Because those three classes of nextgeneration

surface combatants would employ three crews for two

ships and thus have a higher operating tempo than a

singlecrewed ship, they would cost more to operate (see

Table 6). Finally, this option would buy six more combat

logistics ships to sustain the large additional forward

presence it would provide.

Despite the reduced purchases, this approach would still

produce a larger surface combatant force by 2025 than

exists today: 124 ships compared with 115 now (see Fig

ure 9). Moreover, multiple crewing would make that force

equivalent to 165 ships in peacetime—comparable with

the Navy’s 160ship plan. Eventually, however, the steady

state force would number 112 ships, slightly smaller than

today’s force but much more capable. In peacetime pres

ence, that steadystate force would be equivalent to 163

ships. Thus, Option III would achieve a much higher

Figure 9.

Inventory of Surface Combatants Under Option III, 2001-2025

Source: Congressional Budget Office.

Note: DD-963 = Spruance class general-purpose destroyer; FFG-7 = Oliver Hazard Perry class guided-missile frigate; CG-47 = Ticonderoga class guided-missile cruiser;

DDG-51 = Arleigh Burke class guided-missile destroyer; DD(X) = future general-purpose destroyer; LCS = littoral combat ship; CG(X) = future guided-missile

cruiser.
34 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

1

2

3

4

5

6

7

8

DDG-51 DD(X) LCS CG(X)

Figure 10.

Annual Purchases of Surface Combatants Under Option III, 2001-2025

Source: Congressional Budget Office.

Note: DDG-51 = Arleigh Burke class guided-missile destroyer; DD(X) = future general-purpose destroyer; LCS = littoral combat ship; CG(X) = future guided-missile

cruiser.

overall level of peacetime capability than the other options

but have a lower wartime capability, as multiple crews

provide no extra benefit during war. (The number of

actual hulls is the wartime force.)

This approach would provide the least amount of ship

building work for the industrial base of any of the options

analyzed here. Construction rates would increase to a con

sistent level of three ships a year between 2009 and 2020

(see Figure 10), but during that period, one class—the lit

toral combat ship—would represent most of the annual

production. Overall, this option would purchase 58 sur

face combatants between 2003 and 2025, for an average

construction rate of 2.5 ships a year, lower than in Op

tion I.

Average Annual Costs

This approach would do a slightly better job than the

other options of conforming to the budgetary constraints

of this analysis. Between 2003 and 2010, this option

would cost an average of $7.1 billion a year for procure

ment and operation and support (see Table 5 on page 27).

During the succeeding decade, it would cost just $5.6

billion a year, thus imposing the smallest demand on the

Navy’s budget in the period when the service may want

to make major purchases of attack submarines. Between

2021 and 2025, annual costs would rise markedly, to an

average of $8.2 billion, reflecting both operating costs for

multiplecrewed ships and procurement of large numbers

of CG(X) cruisers. (Those costs also include investments

in training facilities for the additional crews, which are

discussed below.)

How Multiple Crewing Would Work

The Navy is currently experimenting with a new multiple

crewing concept called Sea Swap. Notionally, the crew

of a typical surface combatant now spends about 18

months training, performing maintenance, and resting
CHAPTER TWO OPTIONS FOR MANAGING THE TRANSFORMATION TO THE FUTURE SURFACE COMBATANT FORCE 35

Figure 11.

Notional Multiple-Crew Deployment Cycle for Future Surface Combatants

Surface Combatant A

On Deployment At Home

Crew #1 Crew #2 Crew #3 Crew #2 Crew #3 Crew #1

180 Days 180 Days 180 Days 180 Days (56 at sea) 180 Days (56 at sea) 180 Days (56 at sea)

Surface Combatant B

At Home On Deployment

Crew #2 Crew #3 Crew #1 Crew #1 Crew #2 Crew #3

180 Days (56 at sea) 180 Days (56 at sea) 180 Days (56 at sea) 180 Days 180 Days 180 Days

Shore Time

Crew #3 Crew #1 Crew #2 Crew #3 Crew #1 Crew #2

180 Days 180 Days 180 Days 180 Days 180 Days 180 Days

Source: Congressional Budget Office.

before taking its ship on a sixmonth deployment. In con

trast, Sea Swap uses three crews and three ships to keep

one surface combatant deployed for 18 months. The first

crew takes the ship out on deployment while two other

crews continue with their training and maintenance cycles

on two other ships. After six months, the second crew flies

to an overseas location to meet the deployed ship and

relieve the first crew. Six months later, the third crew

relieves the second and then brings the ship home for

maintenance (or, in the case of Spruance destroyers, retire

ment) at the end of the 18month period.

The benefits of Sea Swap are significant. According to the

Navy, three ships that each deploy from the United States

and return independently after six months will provide

a total of 300 days onstation over an 18month period.

By eliminating transit time and allowing time for crews

to turn over, the Sea Swap concept increases the amount

of presence that each ship provides by 35 percent. Thus,

a Sea Swap ship is equivalent to 1.35 ships deploying inde

pendently. For simplicity, CBO assumed that none of the

surface combatants in any of its options or in the Navy’s

160ship plan would be operated using the Sea Swap con

cept. To the extent that the concept was used on new ship

classes, the relative peacetime advantages of CBO’s three

options would not be as large as reported here.

To achieve even greater benefits, this option would take

the Sea Swap approach one step farther by eliminating

one of the two ships that would otherwise remain in the

United States. Instead, three crews would take turns op

erating a pair of surface combatants. When one ship de

ployed for 18 months, the other would be used for atsea

training by the two crews supporting the forward deploy

ment of the sister ship and its crew.

The schedules of the two surface combatants would be

divided into 180day (sixmonth) increments (see Fig

ure 11):
36 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

• The first crew would deploy with the ship for six

months, while the second crew trained with the second

surface combatant. The third crew would be assigned

to shore during that period, where it would conduct

morebasic training at shorebased installations. It

could also spend a modest amount of time at sea if

necessary.

• Near the end of the first six months, the second crew

would be flown to the theater of the deployed surface

combatant and exchange places with the first crew. The

third crew would then assume primary control of the

second surface combatant for moreadvanced shore

training and much more atsea training. The first crew

would fly home and be assigned to shore for rest and

to begin the process of basic training all over again.

During its first months back in the United States, the

first crew would also experience many of its transfers,

retirements, and new assignees.

• After the second sixmonth period, the third crew

would rotate out to the deployed surface combatant,

eventually bringing it home. The second crew would

go ashore and begin the process again. The first crew

would assume control of the second surface combatant,

eventually taking it on its deployment. When the first

surface combatant returned with the third crew, it

would become the training ship (or another ship would

be substituted for it).

The virtue of that approach, especially when used with

newly acquired surface combatants, is that it would save

the procurement costs of a third ship. If Sea Swap provides

an additional 35 percent of onstation time for each of

three surface combatants, this option would provide about

a 100 percent increase in onstation time for each of the

two surface combatants. In terms of peacetime forward

presence, one multiplecrewed surface combatant would

be equal to about two singlecrewed surface combatants.

Furthermore, over a threeyear period, a crew’s personnel

tempo (the amount of time it spends at sea) would be

44 percent—less than the 48 percent that occurs now with

the twoyear cycle of a singlecrewed surface combatant.13

However, there would be one twoyear window during

that period in which the crew’s personnel tempo was

57 percent. In that period, the Navy (under Department

of Defense rules) would have to pay every sailor $100 for

each day over 400 days (out of 730) that he or she was

deployed or training away from the home port. Even

including those costs, multiple crewing is still far more

costeffective than single crewing. The amortized procure

ment and operating costs for an onstation day for a

multiplecrewed DD(X) would be about $800,000, versus

$1.8 million for a singlecrewed DD(X).14

Additional Investments

Making that crewing model work for a large number of

surface combatants would require several investments in

training and maintenance. First, CBO assumed that the

Navy would probably need two new, large training facili

ties—one on the East Coast of the United States and one

on the West Coast—to keep the crews that were not on

deployment proficient. Such facilities might require large

scale mockups of the ships that would be multiple crewed

as well as numerous stateoftheart training systems and

simulators. The Navy does not know how much such

facilities might cost, but CBO’s cost estimate for this op

tion assumed an average of $100 million per year between

2003 and 2025 to buy and operate those facilities.

Second, because the surface combatant force would have

a higher average operating tempo under this option and

thus spend more time at sea, CBO assumed that the Navy

would need to reactivate a destroyer tender to help provide

maintenance overseas and also buy more support ships

to keep the surface combatants resupplied. Under this ap

proach, the surface combatant force could have almost

50 percent more ships deployed than today’s force does,

13. Generally, the Navy wants its sailors to spend three years in a sea

tour followed by three years in a shore tour.

14. Although higher maintenance costs may be necessary for a multiple

crewed ship (and CBO included such higher costs in its analysis),

CBO assumed that the ship would still have a notional service life

of 35 years. Multiplecrewing models for attack submarines assume

a reduction in service life because the submarines consume nuclear

fuel faster and because their hulls are subject to far more strain than

those of surface ships. When that strain becomes too great, it can

result in catastrophic hull failure, killing an entire submarine crew.

The hull and systems of a surface ship can often last much longer

than the ship’s notional service life. Surface combatants are usually

retired because their combat systems become obsolete and the Navy

either is unable to update them or is not willing to spend money

to do so for a relatively old ship.
CHAPTER TWO OPTIONS FOR MANAGING THE TRANSFORMATION TO THE FUTURE SURFACE COMBATANT FORCE 37

and many of those ships would spend onethird less time

in port. Thus, it stands to reason that an additional main

tenance ship might be necessary overseas to make this op

tion work. Consequently, CBO assumed that the Navy

would return one destroyer tender now in the Reserve to

the activeduty force. The costs to operate that ship—

about $50 million a year—are included in the costs of this

option discussed above, as are the costs to buy and operate

six more combat logistics ships to provide additional logis

tics support.

3

Measures of Capability

Under the Various Options

To evaluate the different force structures described

in Chapter 2 and how they compare with the 30Year

Shipbuilding Report and the Navy’s 160ship plan, the

Congressional Budget Office used a variety of measures

of both peacetime and wartime capability. The principal

measures are:

• The total number of surface combatants,

• The number capable of providing longrange fleet air

defense, 

• The number of helicopter hangars on those surface

combatants,

• The total number of vertical launch system cells on

those ships,

• The number of penetrating littoral antisubmarine

warfare suites that they carry,

• The number of 155millimeter advanced gun systems

and 5inch guns capable of firing the extendedrange

guided munition (ERGM) in the surface combatant

force to provide longrange fire support for the Marine

Corps, 

• The total number of nextgeneration ships, 

• The average age of the surface combatant force, and

• The total crew size.

The Navy’s principal mission in peacetime is maintaining

a combatcredible forward presence, so arguably the most

important measure of how well the surface combatant

force performs during peacetime is the capabilities it has

onstation (in its theaters of operations). In wartime, a

better measure is how much actual firepower the force can

bring to bear in a particular period. Thus, for each of the

measures listed above, CBO calculated a given force struc

ture’s capability onstation in peacetime and its surge capa

city 14 days and 36 days after the beginning of a wartime

mobilization.1

The measures that CBO examined offer a fairly reliable

guide to a given force’s ability to provide ships for peace

time naval presence, wartime surge, air and missile de

fense, land attack, and operations against small, fast boats.

Measuring the ability of a force to conduct antisubmarine

warfare in coastal areas or to counter mines is more dif

ficult. Success in performing those missions will depend

heavily on the new systems that the Navy plans to develop

over the next 10 to 15 years—some or most of which may

1. CBO does not have access to the campaign analysis models that

the Navy uses to analyze the demand for ships during wartime.

To calculate wartime surge in this analysis, CBO used data from

the Surface Combatant Force Level Study II, which reported war

time surge numbers—based on a surface combatant force of 116

ships—for Northeast Asia and the Persian Gulf. The model

reported that at the 13 to 14day point, 22 percent of the surface

combatant force could have “surged” (arrived intheater) to North

east Asia, and 15 percent could have surged to the Persian Gulf.

At 36 days, 66 percent of the force could have surged to Northeast

Asia and 50 percent to the Persian Gulf.

CHAPTER
40 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

be unmanned. For the purposes of this analysis, however,

a reasonable proxy for antisubmarine warfare is the num

ber of penetrating littoral ASW suites that will be deployed

on DD(X)s and littoral combat ships, as well as the num

ber of helicopter hangars in the surface combatant force.

The number of helicopter hangars also provides some

insight into a force’s ability to defeat mines because surface

ships deploy helicopters to carry minedetection systems.

CBO’s measures of capability have limitations, however.

If transformation is judged by whether the future surface

combatant force is larger, carries more VLS cells, has more

landattack capability, and incorporates more fleet air

defense capability than today’s force, the measures that

CBO has used will be revealing. But if, as some naval

analysts maintain, the test of naval transformation is

whether the surface combatant force can defeat diesel

electric submarines, mines, and small, fast boats armed

with cruise missiles, these measures will not capture all

aspects of those potential missions. As noted above, for

those missions, the Navy expects eventually to rely heavily

on new unmanned underwater, air, and surface vehicles.

Because those vehicles have not yet been developed, their

effectiveness cannot be determined or captured by any

measure that CBO has available.

Another potential criticism of CBO’s measures is that they

are simple and ignore potentially significant changes in

systems, tactics, and doctrine associated with transforma

tion. The Navy is investing heavily in what it calls

FORCEnet—an effort to link all of the communication,

sensor, and warfare systems of Navy ships so that every

ship in a task force receives the same tactical data. CBO’s

measures do not quantitatively capture the benefits of that

effect or even the benefits of a general improvement in

sensors and communications or the potential to upgrade

the weapons of a particular platform. If a group of net

worked ships is more capable and lethal than the same

group of unnetworked ships, it may also be true that new

ships built with networking in mind will be substantially

more capable than existing ships that have been networked

together. CBO’s measures do not reflect such an effect.

Thus, they may underestimate the capabilities offered by

Option II (which would speed up the transition to next

generation ships) and, by implication, the Navy’s 160ship

plan (which would also retire older surface combatants

early and accelerate the development and procurement

of new ships). As of this writing, neither the Navy, CBO,

nor any studies that CBO is aware of have been able to

quantify the operational and tactical benefits of those im

provements.2

Finally, in choosing its measures, CBO hoped to address

the tension between numbers and capabilities that exists

in deciding how to alter the size and composition of the

surface combatant force. Some Navy officials contend that

the service needs more ships, while others argue that the

emphasis should be on fleet capabilities. For example,

recently departed Secretary of the Navy Gordon England

stated that, “it is capabilities, not numbers that matter . . .

our 300 ships are far more potent than our 600ship Navy

[was].”3

 At the same time, Admiral Vernon Clark, Chief

of Naval Operations, has maintained that the Navy needs

375 ships to do all of the things asked of it, adding, “You

can only be in one place at one time with one ship and

so numbers do matter. Numbers do have a quality all their

own.”4

 Although neither man would disagree with the

other’s viewpoint, those quotations capture the tension

in planning future naval force structure. By examining

a variety of numerical and qualitative measures in terms

of peacetime presence as well as wartime surge, CBO has

attempted to address both sides of that issue.

2. Quantifying the effects of such improvements may be impossible

until they are developed and deployed. Intuitively, it makes sense

that better information will enable naval forces to fight more

effectively. For example, the invention of radar and sonar allowed

air and naval forces to fight better, but quantifying how much

better was impossible when those ideas were still in the technical

development stage. For one attempt to solve that problem, see

Walter Perry and others, Measures of Effectiveness for the Infor

mationAge Navy: The Effects of NetworkCentric Operations on

Combat Outcomes (Santa Monica, Calif.: RAND, 2002). But as

that report states at the outset, “the process reported in this docu

ment is deductive—i.e., none of the equations presented in the

text was based on experimental or operational data.”

3. Gopal Ratnam, “U.S. Navy Wrestles with Fleet Size, Abilities,”

Defense News (July 1, 2002), p. 4.

4. “Interview with Chief of Naval Operations Admiral Vern Clark,”

Sea Power (October 2002). See also Hunter Keeter, “Admiral

Foresees Change in Naval Force Structure, Warfighting,” Defense

Daily (September 12, 2002), p. 9; and Ratnam, “U.S. Navy

Wrestles with Fleet Size, Abilities.”
CHAPTER THREE MEASURES OF CAPABILITY UNDER THE VARIOUS OPTIONS 41

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

12

14

16

18

20

22

24

26

28

Navy's

160-Ship Plan

Option I

Option II

30-Year

Shipbuilding Report

Option III

Figure 12.

Number of Surface Combatants On-Station in Peacetime

Under Alternative Force Structures, 2001-2025

Source: Congressional Budget Office.

Note: Option I would delay the transition to next-generation surface combatants by making the most of the existing fleet. Option II would accelerate the transition to

next-generation ships by retiring much of the existing force early. Option III would buy fewer next-generation ships by assigning multiple crews to new ship classes.

Number of Surface Combatants

The number of surface combatants in the fleet measures

how many ships the Navy can keep onstation in peace

time and how many potential combatants it has in war

time. Although numbers alone do not determine how

capable the force is, they are the first measure to which

most people turn.

With respect to peacetime, the number of surface combat

ants onstation around the world varies significantly be

tween the 30Year Shipbuilding Report and the Navy’s

160ship plan (discussed in Chapter 1) and CBO’s three

options (discussed in Chapter 2). CBO computed the

number of ships onstation using a simple arithmetic

model based on data provided by the Navy. On average,

it takes about 6.3 singlecrewed or 3.2 multiplecrewed

surface combatants to keep one of them onstation at any

given time. On the basis of those figures, Option I would

provide the greatest number of surface combatants on

station over the next 10 years, peaking at about 21 in the

20072012 period (see Figure 12). By retaining and up

grading the Navy’s older ships, that option would main

tain a far higher level of overseas presence than any other

approach discussed in this study. Conversely, Option II,

by retiring more existing ships early, would provide the

smallest number of ships onstation: 13 in 2009. After

that, however, Option III (which would use multiple

crewing on nextgeneration ships) and the Navy’s 160ship

plan would achieve the highest level of overseas presence:

26 ships onstation by 2025. 

In the wartime analysis, CBO calculated the number of

ships that could be intheater in Northeast Asia or the

Persian Gulf 14 days and 36 days into a wartime surge.

As in the peacetime case, the results vary significantly

depending on the year being examined. Option I would

fare the best in 2010 in wartime as well as peacetime by

providing more surface combatants for a conflict in either

location (see Figure 13). In 2025, all three options dis

cussed in Chapter 2 would perform almost equally well

because, by that time, they would have roughly the same

size surface combatant force.
42 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

2010 2015 2020 2025

0

20

40

60

80

100

120

2010 2015 2020 2025

0

20

40

60

80

100

120

Northeast Asia Persian Gulf

After 14 Days

Northeast Asia Persian Gulf

After 36 Days

2010 2015 2020 2025

0

20

40

60

80

100

120

2010 2015 2020 2025

0

20

40

60

80

100

120

30-Year Shipbuilding Report Navy's 160-Ship Plan Option I Option II Option III

Figure 13.

Number of Surface Combatants That Could Be Surged to Northeast Asia and

the Persian Gulf in Wartime Under Alternative Force Structures, 2010-2025

Source: Congressional Budget Office.

Note: Option I would delay the transition to next-generation surface combatants by making the most of the existing fleet. Option II would accelerate the transition to

next-generation ships by retiring much of the existing force early. Option III would buy fewer next-generation ships by assigning multiple crews to new ship classes.
CHAPTER THREE MEASURES OF CAPABILITY UNDER THE VARIOUS OPTIONS 43

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

8

10

12

14

16

18

Navy's

160-Ship Plan

Option I

Option II

30-Year

Shipbuilding Report

Option III

Figure 14.

Number of Ships Capable of Long-Range Air and Missile Defense 

On-Station in Peacetime Under Alternative Force Structures, 2001-2025

Source: Congressional Budget Office.

Note: Option I would delay the transition to next-generation surface combatants by making the most of the existing fleet. Option II would accelerate the transition to

next-generation ships by retiring much of the existing force early. Option III would buy fewer next-generation ships by assigning multiple crews to new ship classes.

For example, in a war in the Persian Gulf in 2010, Option

I would provide 19 surface combatants after 14 days;

Option II, only 12; Option III, 16; and the Navy’s 160

ship plan, 17. As the war proceeded, the numbers would

jump considerably. After 36 days, Option I would bring

67 surface combatants to the fight; Option II, only 43;

and the others, 56 to 59. 

If that war occurred in 2025, however, the story would

be very different. After 14 days, the Navy would be able

to bring 24 surface combatants to the fight under its 160

ship plan, compared with 18 to 19 under the other ap

proaches. By that time, Option I would have lost its ad

vantage, and Option II would fare as well as the other

approaches. A similar pattern would be visible 36 days

after the start of wartime mobilization. 

Ships Capable of Long-Range Fleet

Air and Missile Defense

Over the past 20 years, the development of the Aegis

combat system has introduced a major improvement in

fleet air defenses and naval operations. Surface ships can

now perform missions in environments that have greater

threats from enemy aircraft and missiles without requiring

the support of an aircraft carrier. The Navy can therefore

provide more presence in more places than it could before

the Aegis system was developed. For that reason, the Navy

continues to invest in Aegis ships and plans to eventually

have more than 80 surface combatants capable of long

range air defense. The importance of that investment was

illustrated by a Navy spokesman when he said (somewhat

inaccurately), “If it’s not Aegis, it simply doesn’t have a

significant role in our future.”5

 For this measure of capa

bility, CBO chose to interpret “Aegis” in that comment

to mean ships capable of defending a fleet from longrange

air and missile attack. Ships such as the DD(X) and LCS

are not counted in this measure, but the CG(X), which

is expected to have a nextgeneration airdefense system,

is included.

5. Quoted in Pat Towell, “Navy Caught in Budget Squeeze as

Urgency to Build Ships Grows,” Congressional Quarterly Weekly

(February 23, 2002).
44 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

2010 2015 2020 2025

0

20

40

60

80

2010 2015 2020 2025

0

20

40

60

80

Northeast Asia Persian Gulf

After 14 Days

Northeast Asia Persian Gulf

After 36 Days

2010 2015 2020 2025

0

20

40

60

80

2010 2015 2020 2025

0

20

40

60

80

30-Year Shipbuilding Report Navy's 160-Ship Plan Option I Option II Option III

Figure 15.

Number of Ships Capable of Long-Range Air and Missile Defense That 

Could Be Surged to Northeast Asia and the Persian Gulf in Wartime 

Under Alternative Force Structures, 2010-2025

Source: Congressional Budget Office.

Note: Option I would delay the transition to next-generation surface combatants by making the most of the existing fleet. Option II would accelerate the transition to

next-generation ships by retiring much of the existing force early. Option III would buy fewer next-generation ships by assigning multiple crews to new ship classes.
CHAPTER THREE MEASURES OF CAPABILITY UNDER THE VARIOUS OPTIONS 45

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

10

15

20

25

30

35

40

Navy's

Option I 160-Ship Plan

Option II

30-Year

Shipbuilding Report

Option III

Figure 16.

Number of Helicopter Hangars On-Station in Peacetime

Under Alternative Force Structures, 2001-2025

Source: Congressional Budget Office.

Note: Option I would delay the transition to next-generation surface combatants by making the most of the existing fleet. Option II would accelerate the transition to

next-generation ships by retiring much of the existing force early. Option III would buy fewer next-generation ships by assigning multiple crews to new ship classes.

By this measure, Option I would perform the best in

peacetime almost throughout the entire period because

it would retain all of the Ticonderoga class cruisers and

upgrade them (see Figure 14 on page 43). The 30Year

Shipbuilding Report would perform almost equally well,

although cruiser conversions were not included in that

plan. The Navy’s 160ship plan would fall slightly short

of Option I in peacetime fleet defense, reflecting five fewer

cruisers and two fewer Arleigh Burke class destroyers.

Option II would fare the worst throughout the 20032025

period according to this measure because it would retain

and upgrade only 13 Ticonderogas. Significant changes

would occur between 2019 and 2025, however. In 2019,

the number of fleet airdefense ships in the Navy’s 160

ship plan would begin to grow because of the apparent

overlap between the cruiser conversion and CG(X)

programs. By 2023, Option III would begin to reap the

benefits of using multiple crews on the CG(X) cruiser.

Despite those differences, all of the approaches that CBO

examined would be far more capable than today’s surface

combatant force with respect to longrange fleet air and

missile defense.

Similar patterns are evident for wartime surge. All of the

force structures discussed in this study would provide es

sentially the same number of ships capable of longrange

air and missile defense in Northeast Asia and the Persian

Gulf early in a conflict (see Figure 15). As a war progressed,

however, the 30Year Shipbuilding Report, the Navy’s

160ship plan, and Option I would put a larger number

of ships intheater than Options II and III would.

Helicopter Hangars

Generally, the most effective weapon against quiet diesel

electric submarines and small, fast boats armed with tor

pedoes or cruise missiles is a helicopter equipped with

missiles. Counting the number of helicopter hangars on

surface ships reveals the number of helicopters that the

Navy could have available to counter such threats. The

more hangars available onstation during peacetime or

intheater during a war, the more flexible the surface

combatant force is, and the better equipped it will be to

perform its missions, particularly defeating antiaccess

threats.
46 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

2010 2015 2020 2025

0

20

40

60

80

100

120

140

160

2010 2015 2020 2025

0

20

40

60

80

100

120

140

160

Northeast Asia Persian Gulf

After 14 Days

Northeast Asia Persian Gulf

After 36 Days

2010 2015 2020 2025

0

20

40

60

80

100

120

140

160

2010 2015 2020 2025

0

20

40

60

80

100

120

140

160

30-Year Shipbuilding Report Navy's 160-Ship Plan Option I Option II Option III

Figure 17.

Number of Helicopter Hangars That Could Be Surged to Northeast Asia and

the Persian Gulf in Wartime Under Alternative Force Structures, 2010-2025

Source: Congressional Budget Office.

Note: Option I would delay the transition to next-generation surface combatants by making the most of the existing fleet. Option II would accelerate the transition to

next-generation ships by retiring much of the existing force early. Option III would buy fewer next-generation ships by assigning multiple crews to new ship classes.
CHAPTER THREE MEASURES OF CAPABILITY UNDER THE VARIOUS OPTIONS 47

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

800

1100

1400

1700

2000

2300

Navy's

160-Ship Plan

Option I

Option II

30-Year

Shipbuilding Report

Option III

2,300

2,000

1,700

1,400

1,100

Figure 18.

Number of VLS Cells on Surface Combatants On-Station in Peacetime

Under Alternative Force Structures, 2001-2025

Source: Congressional Budget Office.

Notes: VLS = vertical launch system.

Option I would delay the transition to next-generation surface combatants by making the most of the existing fleet. Option II would accelerate the transition to

next-generation ships by retiring much of the existing force early. Option III would buy fewer next-generation ships by assigning multiple crews to new ship classes.

During both peacetime and wartime, Option I would out

perform the other options through 2014 because it would

retain Spruance class destroyers, which are capable of em

barking two helicopters apiece. In peacetime, Option I

would provide a substantially greater number of helicopter

hangars onstation between 2003 and 2014 than any other

force structure (see Figure 16 on page 45). After 2014, the

Navy’s 160ship plan and Option III would provide about

the same amount of helicopter capability.

In wartime, the results are similar. Option I would provide

the most helicopter hangars during a surge to either

Northeast Asia or the Persian Gulf in 2010. By 2025,

Options II and III would provide about the same amount

of capability as each other. Only the Navy’s 160ship plan

would be able to surge substantially higher numbers of

helicopter hangars: 139 to Northeast Asia and 106 to the

Persian Gulf in 36 days (see Figure 17). Option I would

provide the next highest numbers: 134 and 102, respec

tively. Options II and III would put the fewest hangars

intheater during that time: about 100 in Northeast Asia

and 80 in the Persian Gulf. 

Vertical Launch System Cells

The development and deployment of VLS cells have

played an important role in vastly increasing the capability

of surface ships. In peacetime, the Navy’s regional combat

ant commanders require a certain number of Tomahawk

missiles to be onstation in their respective theaters. Those

Tomahawks are usually launched from VLS cells (although

not every cell on a surface ship is filled with landattack

missiles). Thus, the number of VLS cells can be used to

approximate how well a force structure would meet those

peacetime requirements. In addition, given the premium

that the Defense Planning Guidance puts on winning wars

quickly with forwardstationed forces, this measure can

serve as a proxy for combat power on the first day of a war.

As the war proceeds, however, the number of VLS cells

that can be surged to a theater approximates the ability

of the surface combatant force to conduct longrange

strike operations in support of military objectives.6

6. CBO did not use the actual number of Tomahawks deployed on

surface ships as a measure because that number can and will vary

depending on the mission that a given ship is assigned to perform.
48 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

2010 2015 2020 2025

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2010 2015 2020 2025

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Northeast Asia Persian Gulf

After 14 Days

Northeast Asia Persian Gulf

After 36 Days

2010 2015 2020 2025

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2010 2015 2020 2025

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

30-Year Shipbuilding Report Navy's 160-Ship Plan Option I Option II Option III

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

9,000

10,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

9,000

10,000

8,000

Figure 19.

Number of VLS Cells on Surface Combatants That Could Be Surged to Northeast Asia

and the Persian Gulf in Wartime Under Alternative Force Structures, 2010-2025

Source:Congressional Budget Office.

Notes: VLS = vertical launch system.

Option I would delay the transition to next-generation surface combatants by making the most of the existing fleet. Option II would accelerate the transition to

next-generation ships by retiring much of the existing force early. Option III would buy fewer next-generation ships by assigning multiple crews to new ship classes.
CHAPTER THREE MEASURES OF CAPABILITY UNDER THE VARIOUS OPTIONS 49

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

0

1

2

3

4

5

6

7

8

Navy's

160-Ship Plan

Option I

Option II

Option III

30-Year

Shipbuilding Report

Figure 20.

Number of Ships with Penetrating Littoral ASW Suites On-Station in Peacetime

Under Alternative Force Structures, 2010-2025

Source: Congressional Budget Office.

Notes: ASW = antisubmarine warfare.

Option I would delay the transition to next-generation surface combatants by making the most of the existing fleet. Option II would accelerate the transition to

next-generation ships by retiring much of the existing force early. Option III would buy fewer next-generation ships by assigning multiple crews to new ship classes.

As with many of the previous measures, Option I holds

a significant advantage over the alternatives in the number

of VLS cells through about 2012 (see Figure 18 on

page 47). The reason is that Option I would retain the

Spruance class destroyers—which each carry 61 VLS cells

(normally armed with Tomahawks)—through their 35

year service life. None of the other force structures would

do that. On average, Option I would be able to keep about

140 more VLS cells onstation than any other option

would. After the Spruances retired, however, Option I

would lose its advantage for the rest of the period of this

analysis. After 2012, the plan outlined in the 30Year

Shipbuilding Report would outperform the alternatives

because it is the only one that would buy 32 DD(X)

destroyers, each carrying 128 VLS cells. By 2025, that

force structure would still yield the most cells, although

the Navy’s 160ship plan would produce similar results.

Options I and II would provide the least cells.

That pattern would also occur in the event of war. During

a wartime surge, Option I would put more VLS cells in

theater in 2010 than any other approach, but by 2025,

it would fall behind both the 30Year Shipbuilding Report

and the Navy’s 160ship plan (see Figure 19). However,

in both theaters and in various years, Option I would

outperform the other options with limited budgets because

all of the new frigates that it would buy would carry 48

VLS cells, unlike the littoral combat ship included in the

Navy’s 160ship plan and Options II and III.

Penetrating Littoral Antisubmarine

Warfare Suites

The ASW combat system on today’s cruisers, destroyers,

and frigates (the AN/SQQ89) was designed primarily for

openocean warfare against Soviet submarines. The

AN/SQQ89 has been modernized to give it some shallow

water capabilities. Nevertheless, a better indicator of the

ASW prowess of a future surface combatant force might

be the number of ships equipped with a new ASW system

that was designed from the outset to sweep for submarines

in littoral waters.
50 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

2010 2015 2020 2025

0

5

10

15

20

25

30

2010 2015 2020 2025

0

5

10

15

20

25

30

Northeast Asia

After 14 Days

Northeast Asia Persian Gulf

After 36 Days

2010 2015 2020 2025

0

5

10

15

20

25

30

2010 2015 2020 2025

0

5

10

15

20

25

30

30-Year Shipbuilding Report Navy's 160-Ship Plan Option I Option II Option III

Persian Gulf

Figure 21.

Number of Ships with Penetrating Littoral ASW Suites That 

Could Be Surged to Northeast Asia and the Persian Gulf in Wartime 

Under Alternative Force Structures, 2010-2025

Source: Congressional Budget Office.

Notes: ASW = antisubmarine warfare.

Option I would delay the transition to next-generation surface combatants by making the most of the existing fleet. Option II would accelerate the transition to

next-generation ships by retiring much of the existing force early. Option III would buy fewer next-generation ships by assigning multiple crews to new ship classes.
CHAPTER THREE MEASURES OF CAPABILITY UNDER THE VARIOUS OPTIONS 51

ERGM 155-Millimeter

0

2

4

6

8

10

12

14

16

ERGM 155-Millimeter

0

2

4

6

8

10

12

14

16

30-Year Shipbuilding Report Navy's 160-Ship Plan Option I Option II Option III

2015 2025

Figure 22.

Amount of Gunfire Support On-Station in Peacetime

Under Alternative Force Structures, 2015 and 2025

Source: Congressional Budget Office.

Notes: ERGM = extended-range guided munition.

Option I would delay the transition to next-generation surface combatants by making the most of the existing fleet. Option II would accelerate the transition to

next-generation ships by retiring much of the existing force early. Option III would buy fewer next-generation ships by assigning multiple crews to new ship classes.

For this analysis, CBO assumed that the littoral combat

ship, the DD(X), and the FFG(X) envisioned in Option

I would have such littoral ASW systems. Littoral combat

ships are intended to be focusedmission ships, however,

so CBO assumed that only onethird of them would be

equipped with the littoral ASW module at any one time.

CBO included the DD(X) in this group because, histor

ically, generalpurpose destroyers have been assigned the

ASW mission, even though in practice Navy commanders

might be reluctant to use such an expensive ship for littoral

antisubmarine warfare. The CG(X) could also have a new

ASW system, but that ship would probably not be used

for earlypenetration operations since its primary mission

is supposed to be fleet air and missile defense. 

With respect to peacetime forward presence, Option III

would provide the most new ASW capability through

2020 because of the multiplecrewing concept used for

new ship classes (see Figure 20 on page 49). After that,

however, Option I’s new frigates—all of which are as

sumed to be capable of antisubmarine warfare—would

provide the largest forwarddeployed force. The Navy’s

160ship plan would be in the middle of the pack. Option

II would provide the least new ASW capability because

its LCS force is limited to 30 ships, so only 10 are assumed

to be configured for antisubmarine warfare.

In wartime, the pattern would be different. The Navy’s

160ship plan would put the most littoral ASW capability

intheater until 2020 (see Figure 21). But after that, Op

tion I’s frigates would again hold sway. Option III would

lose its advantage in these scenarios because multiple

crewing provides no extra benefit in wartime, and that

option’s force structure would have the smallest number

of nextgeneration ASW ships available.
52 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

ERGM 155-mm ERGM 155-mm

0

10

20

30

40

50

60

70

ERGM 155-mm ERGM 155-mm

0

10

20

30

40

50

60

70

Northeast Asia Persian Gulf

ERGM 155-mm ERGM 155-mm

0

10

20

30

40

50

60

70

30-Year Shipbuilding Report Navy's 160-Ship Plan Option I Option II Option III

Northeast Asia Persian Gulf

ERGM 155-mm ERGM 155-mm

0

10

20

30

40

50

60

70

2015 2025 2015 2025

2015 2025 2015 2025

After 14 Days

After 36 Days

Figure 23.

Amount of Gunfire Support That Could Be Surged to Northeast Asia and

the Persian Gulf in Wartime Under Alternative Force Structures, 2015 and 2025

Source: Congressional Budget Office.

Notes: ERGM = extended-range guided munition; mm = millimeter.

Option I would delay the transition to next-generation surface combatants by making the most of the existing fleet. Option II would accelerate the transition to

next-generation ships by retiring much of the existing force early. Option III would buy fewer next-generation ships by assigning multiple crews to new ship classes.
CHAPTER THREE MEASURES OF CAPABILITY UNDER THE VARIOUS OPTIONS 53

ERGM and 155-Millimeter Guns

As noted earlier, one of the principal missions of surface

combatants is to provide fire support to Marine amphib

ious forces. Historically, that support was provided by the

conventional guns that surface ships carry. With the final

retirement of the Iowa class battleships, however, the

largest gun on a Navy ship was 5 inches and 54 caliber,

with a range of about 13 nautical miles. Although many

Marines have never considered the 5inch gun adequate

for their firesupport needs, it is at least capable of provid

ing gunfire for a Marine landing on a beach. 

The Marine Corps’s future warfighting doctrine envisions

flying over beaches and dropping Marines farther inland

to avoid areadenial threats (such as mines and diesel

electric submarines) or troop concentrations close to shore.

That doctrine will require much longer range fire support

from both guns and missiles. In response, the Navy is

developing the extendedrange guided munition (ERGM),

a rocketpropelled projectile shot from a 5inch, 62caliber

gun, which is capable of going 63 nautical miles. In addi

tion, as was discussed in Chapter 1, the new DD(X) de

stroyer will carry one or two 155mm guns, which are

intended to be much more powerful than 5inch guns and

capable of firing rocketpropelled projectiles up to 100

nautical miles. Because few ERGMcapable guns and no

155mm guns are in the fleet today, CBO used the num

bers of those weapons in the surface combatant force as

a measure of future firesupport capability.

The number of guns on ships that are forward deployed

around the globe in peacetime measures the availability

of gun firepower in the event that the Marines need to

conduct an operation very quickly. Between now and

2015, the force structures discussed in this study would

provide roughly similar amounts of firepower onstation

during peacetime—with the exception of Option I, which

would have no 155mm guns because it would cancel the

DD(X) destroyer but would have a much larger number

of ERGMcapable guns (see Figure 22 on page 51). By

2025, there would be notably more variance with respect

to the 30Year Shipbuilding Report, which would have

twice as many 155mm guns as other force structures

because it would buy 32 DD(X) destroyers and no littoral

combat ships. The only other significant difference is that

it and Option II would have fewer ERGMcapable guns

since Option II would cancel much of the cruiser conver

sion program, which proposes putting those weapons on

about half of the Ticonderoga class cruisers.

In the event of war in 2015, the surface combatant force

of the Navy’s 160ship plan would put the largest total

number of guns in the theater of operations after 14 or

36 days (see Figure 23). Option I could not put any 155

mm guns intheater. Option III would surge fewer 155

mm guns than the alternatives would because its dual

crewed DD(X) destroyers would be fewer in number than

under either Option II or the Navy’s 160ship plan. In

2025, the force structure of the 30Year Shipbuilding

Report would provide the most firepower. It would put

the same total number of guns intheater as Option I, but

twothirds of them would be 155mm guns.

Next-Generation Ships

As a final measure of capability, CBO looked at the

number of nextgeneration ships in each surface combat

ant force. Nextgeneration ships include the DD(X), the

CG(X), the littoral combat ship, and the new frigate

included in Option I. This measure captures how effec

tively the transition to nextgeneration ships has occurred

as well as assessing how stealthy the surface combatant

force is. Because stealth in surface ships is not necessary

to perform peacetime missions, it should be regarded pri

marily as a wartime measure.

Under this measure, the surface combatant force implied

by the Navy’s 160ship plan would have by far the most

nextgeneration ships between 2010 and 2025 (see Fig

ure 24). Option II, with its emphasis on a speedy transi

tion, would have the nextlargest number of next

generation ships. Options I and III and the 30Year Ship

building Report would be close together at the back of

the pack for much of the 20102025 period.

Total Crew Size

The total number of sailors serving on surface combatants

provides a useful measure of how many sailors could be

put at risk in a wartime situation as well as the Navy’s

potential difficulty in recruiting. Options that required

more sailors would obviously pose a greater recruiting

challenge. Conversely, if nextgeneration ships needed

fewer sailors to run them, they might require better edu
54 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

0

10

20

30

40

50

60

70

80

90

Navy's

160-Ship Plan

Option I

Option II

Option III

30-Year

Shipbuilding Report

Figure 24.

Total Number of Next-Generation Ships Under Alternative

Force Structures, 2010-2025

Source: Congressional Budget Office.

Note: Option I would delay the transition to next-generation surface combatants by making the most of the existing fleet. Option II would accelerate the transition to

next-generation ships by retiring much of the existing force early. Option III would buy fewer next-generation ships by assigning multiple crews to new ship classes.

cated and more technically trained personnel than older

ships do. Thus, options with larger numbers of next

generation ships might necessitate more higherranking

officers and, especially, enlisted personnel.

Of the approaches in this study, Option I would have the

most demanding crew requirements through 2014 (see

Figure 25). By retaining and operating the legacy fleet,

it would not benefit from a smaller force structure and

thus from lower personnel requirements. After 2020, the

Navy’s 160ship plan would have the largest personnel

requirements because it would have by far the biggest force

structure. By 2025, Option III (which would use three

crews for two ships of each new class) would have the

secondhighest personnel requirements. Option II would

place the least pressure on the Navy’s personnel system

because its surface combatant force would be smaller than

those of Options I and III and the Navy’s 160ship plan.

(Option II’s force structure would be larger than that of

the 30Year Shipbuilding Report, on average, but the

latter’s ships would require higher personnel levels than

many of the ships in Option II.)

Average Age

The last measure that CBO examined was the average age

of the surface combatant force under the various ap

proaches. The service life of a surface combatant can range

from 20 to 40 years depending on the kind of ship it is

and on whether its combat systems are routinely upgraded

to maintain operational effectiveness. CBO estimates that

the average service life of the Navy’s surface combatants

is between 28 and 38 years.7

 (That range reflects the

7. The Navy can and has retired ships younger than 28, often to save

money. (For example, most Navy officials would probably agree

that Spruance class destroyers could be useful to the fleet through

most of their notional service life of 35 years, but the Navy does

not find them useful enough to justify their operating costs.) In

calculating the servicelife range, CBO did not include early

retirements for financial reasons.
CHAPTER THREE MEASURES OF CAPABILITY UNDER THE VARIOUS OPTIONS 55

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

20000

25000

30000

35000

40000

45000

Navy's

160-Ship Plan Option I

Option II

Option III

30-Year

Shipbuilding Report

45,000

40,000

35,000

30,000

25,000

20,000

Figure 25.

Total Crew Size of the Surface Combatant Force Under Alternative

Force Structures, 2001-2025

Source: Congressional Budget Office.

Note: Option I would delay the transition to next-generation surface combatants by making the most of the existing fleet. Option II would accelerate the transition to

next-generation ships by retiring much of the existing force early. Option III would buy fewer next-generation ships by assigning multiple crews to new ship classes.

Navy’s uncertainty about how long a ship will remain

useful.) 

In general, if the average age of a weapon system is within

the range of half its service life, the system can be

considered relatively healthy. If, however, its average age

exceeds that halflife range, the system is aging overall.

Unless that aging is stopped, the military must eventually

spend large sums of money for replacements or see the

stocks of that weapon system shrink. The same principle

holds true for the Navy’s surface combatants. By CBO’s

estimate, their halflife range is 14 to 19 years.

In all the force structures that CBO examined, the average

age of the surface combatant force would remain within

or below the halflife range through 2022 (see Figure 26).

The Navy’s 160ship plan would keep that age in the

lower part of the halflife range. Option I would produce

the oldest force of surface combatants throughout most

of the 20032025 period, and the average age would

exceed the halflife range by 2023. Option II would result

in the youngest force, with an average age below that range

until 2016. Because it would buy fewer new ships, Option

III would see the average age of surface combatants rise

after 2014, exceeding the halflife range by 2024.

Implications of the Analysis

The first and most important conclusion that can be

drawn from this analysis is that even if the Navy restricted

spending on the surface combatant force to today’s levels,

it could have a larger and more capable group of ships over

the course of 25 years than it has today (see Table 7). In

doing so, the Navy might free up resources to pursue other

transformation efforts or buy larger numbers of other types

of ships. Of course, if the Navy bought all of the ships

implied by the 160ship plan, it would have an even bigger

and more powerful surface combatant force than it could

achieve under the current funding level. But as Chapter

1 described, unless the Navy’s shipbuilding budget grew

significantly, making such an investment would be diffi

cult because of competing priorities and could end up

retarding transformation in other areas. 
56 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

Navy's

160-Ship Plan

Option II

30-Year

Shipbuilding Report

2001 2004 2007 2010 2013 2016 2019 2022 2025

0

5

10

15

20

25

Option I

Option III

Half-Life Range

(Shaded area)

Figure 26.

Average Age of the Surface Combatant Force Under Alternative

Force Structures, 2001-2025

Source: Congressional Budget Office.

Notes: Half-life refers to half the expected service life of a surface combatant. However, because actual and expected service lives have varied over time, CBO assumed

a range for the half-life to reflect that variation. If the average age for a class of surface combatants remains within the half-life range, that indicates that the

force is being replaced relatively steadily. If the average age exceeds or falls short of the half-life range, the force is being replaced either at levels less than or

greater than the level required for steady-state replacement.

Option I would delay the transition to next-generation surface combatants by making the most of the existing fleet. Option II would accelerate the transition to

next-generation ships by retiring much of the existing force early. Option III would buy fewer next-generation ships by assigning multiple crews to new ship classes.

How effectively would the different options in this an

alysis transform the surface combatant force? The answer

depends on the definition of transformation. The force

structure options outlined in Chapter 2 would all sub

stantially boost the effectiveness of the surface combatant

force, but they arguably would not provide the “dramatic”

increase in military capability that President Bush referred

to in describing transformation. 

If naval transformation is measured by the ability to defeat

threats from mines, dieselelectric submarines, and small,

fast boats, the answer is less clear. Today, mines are an

intractable problem that the Navy is not certain it can

solve. Dieselelectric submarines, especially those with air

independent propulsion, could prove just as hard to deal

with. (Recent history demonstrates that such submarines

—even without airindependent propulsion—make Navy

commanders very nervous.) No one knows whether the

remote systems that the Navy is developing to address

both of those threats will be effective, because they are far

from complete.8

 In the case of the smallboat threat, the

helicopters that surface combatants carry should be able

to overcome it, so long as the number of boats is not great

enough to saturate a task force’s defenses. Those problems

afflict all of the force structures examined in this study,

not just the three CBO options.

What happens after 2025? The answer will be determined

largely by what the Navy decides to do with its Arleigh

Burke class destroyers. CBO assumed for this analysis that

8. See Roxana Tiron, “Unmanned Underwater Vehicles Not Quite

There Yet, Navy Says,” National Defense (April 2002), pp. 4445.
CHAPTER THREE MEASURES OF CAPABILITY UNDER THE VARIOUS OPTIONS 57

Table 7.

The Surface Combatant Force in 2025 Under Alternative Force Structures

Number of

LongTotal Average Total Range Air- Littoral NextNumber Age Crew Defense Helicopter ASW Generation VLS Guns

Force Structure of Ships (Years) Size Ships Hangars Suites Ships Cellsa ERGM 155-mm

30-Year Shipbuilding Report 122 17.6 33,900 90 186 32 49 14,500 31 64

Navy’s 160-Ship Plan 162 15.3 36,600 90 212 34 89 14,000 49 32

Option I 130 20.2 36,000 90 204 40 42 11,200 96 0

Option II 123 18.5 32,200 83 162 21 49 10,600 31 24

Option III

Peacetime equivalentb 165 19.8 36,700 93 218 34 82 13,100 49 32

Actual hulls 124 19.8 36,700 88 164 17 41 10,400 49 16

Memorandum:

Current Force 115 13.3 36,700 69 168 0 0 7,300 12 0

Source: Congressional Budget Office.

Notes: ASW = antisubmarine warfare; VLS = vertical launch system; ERGM = extended-range guided munition; mm = millimeter.

Option I would delay the transition to next-generation surface combatants by making the most of the existing fleet. Option II would accelerate the transition

to next-generation ships by retiring much of the existing force early. Option III would buy fewer next-generation ships by assigning multiple crews to new ship

classes.

a. These numbers assume 61 VLS cells for Spruance destroyers, 90 for Flight I/II Arleigh Burke destroyers, 96 for Flight IIA Arleigh Burke destroyers, 64 for the first

two modernized Ticonderoga cruisers, 128 for the next three modernized Ticonderoga cruisers, 122 for Improved Ticonderogas, 128 for DD(X) destroyers, 200

for CG(X) cruisers, and 48 for a next-generation frigate.

b. The force level and capability numbers for this alternative are the peacetime equivalents of single-crewed ships. That is, the 124 ships of Option III are equivalent

to 165 single-crewed ships in their ability to provide forward presence.

those ships would not receive any midlife upgrades and

would serve for 35 years. That assumption may not be

a reasonable one, however. Historically, surface combat

ants become less effective in wartime operational environ

ments well before the end of their notional 35year service

lives in the absence of midlife improvements to their

combat systems. If the Arleigh Burkes do not receive such

upgrades, they may be retired after only 25 years, begin

ning around 2016. That would leave all of the force struc

tures in this study much smaller by 2025 than reported

here. If, by contrast, those ships receive midlife improve

ments, they may be able to serve for 40 years—the esti

mated service life of a converted Ticonderoga class cruiser.

In that case, the first Arleigh Burke would not leave the

fleet until 2036, which means that the surface combatant

forces in this analysis would look fairly robust for the next

three decades. 

Upgrading Arleigh Burke destroyers, however, would re

quire funding that has not been accounted for in this

analysis. CBO has no way of knowing what midlife im

provements the Arleigh Burkes might need in 10 to 15

years or how much the upgrades might cost, which is why

it did not address that important issue. But those de

stroyers will eventually represent about onethird to one

half of the surface combatant force, so how the Navy ulti

mately deals with them will have farreaching implications

for both the size of that force and the resources needed

to sustain it.

If the Arleigh Burkes stayed in the fleet throughout their

35year service lives and no additional money was spent

to improve their combat systems, the surface combatant

force would begin to shrink after 2025 under all three

CBO options. That decline would occur because the force

structures in Options I and II cannot be sustained and

operated indefinitely on an average annual budget of $6.6

billion. Option I would require $7.3 billion a year to

sustain and operate a steadystate force of 64 Arleigh Burke

destroyers, 24 cruisers, and 40 FFG(X)s. Option II would
58 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

need $7.5 billion annually to sustain a steadystate force

of 61 Arleigh Burkes, 12 DD(X)s, 24 CG(X)s, and 30

littoral combat ships. By contrast, Option III’s steadystate

force of 112 ships, including 51 multiplecrewed ones,

could be sustained and operated for $6.6 billion year. (In

2025, Option III’s force structure is actually about 10

ships larger than its steadystate size.)

The three options described in this study represent effec

tive ways to defer significantly higher spending on surface

combatants for the next 20 years. In the meantime, the

Navy could use the money that was not spent on surface

combatants to pay for different transformation efforts or

other ship programs. Of course, whether the Navy should

do that is a matter for defense officials and lawmakers to

decide. It is beyond the scope of this analysis and of CBO’s

mandate.
Cost Estimates for New Ships in the Navy’s

160-Ship Plan and CBO’s Option I

When this study was being written, the Navy’s

force of surface combatants included 17 Spruance class

destroyers, 27 Ticonderoga class cruisers, 33 Oliver

Hazard Perry class frigates, and 38 Arleigh Burke class

destroyers. According to published plans, the Navy will

retire all of the Spruance class destroyers and the first five

Ticonderoga class cruisers by 2006, upgrade the remaining

cruisers and all of the Oliver Hazard Perry class frigates

over the next 10 years, and deploy 24 more Arleigh Burke

class destroyers by 2010. However, the Navy’s main focus

in transforming the surface combatant force is not those

ships but the three new classes of ship—the DD(X)

destroyer, the littoral combat ship (LCS), and the CG(X)

cruiser—that it plans to buy starting as early as 2005.

In estimating costs for this study, the Congressional Bud

get Office assumed that the Navy would buy 16 DD(X)s,

56 LCSs, and 32 CG(X)s between 2005 and 2025 under

its 160ship plan. CBO estimates that purchasing those

104 ships would cost a total of about $120 billion (in

2003 dollars). Production costs for the CG(X) cruiser

make up roughly 60 percent of that amount, or about

$70 billion. Production costs for the DD(X) and LCS

account for about $30 billion and $20 billion, respectively.

This appendix gives the basis for those estimates as well

as information about CBO’s cost estimate for the 40

FFG(X) frigates envisioned in Option I.

The Navy has provided some details about the acquisition

schedules for the DD(X) and LCS programs but little in

formation on the schedule of the CG(X) program. The

Navy has requested funds to buy the first DD(X) destroyer

in 2005 and plans to buy a total of eight ships by 2009.

It estimates that those eight ships will cost a total of about

$10 billion (in 2003 dollars). The Navy also plans to pur

chase the first LCS in 2005 and a total of nine ships over

the same period, at a total cost of about $2.5 billion, it

estimates (including the cost of mission modules for those

ships). However, the Navy has not yet determined the total

production run for either the DD(X) or the LCS.1

In the absence of detailed information from the Pentagon,

CBO developed cost estimates for the DD(X), LCS, and

CG(X) on the basis of toplevel descriptions of those ships

contained in Navy briefings and press reports. (The

characteristics that CBO assumed in estimating produc

tion costs of those new ships are summarized in Table 1

on page 5.) It also postulated procurement schedules for

the three ships consistent with the information in those

documents (see Table A1). Similarly, CBO developed its

cost estimate and procurement schedule for the FFG(X)

on the assumption that the ship’s general characteristics

would be consistent with those of the FFG7 frigate.

Significant uncertainty exists about the capabilities, tech

nologies, and schedules for those new surface combatants.

CBO’s cost estimates represent one possible outcome,

calculated under the assumptions described above. But

programs (such as the ones for those ships) that are in the

early stages of the development cycle and at the cutting

edge of technology have a greater risk of cost and schedule

growth than do programs that are better defined and based

on proven technologies. Although current cost estimates

for those ships account for such risks to some extent, CBO

expects that its estimates will change, perhaps significantly,

as each ship’s design and acquisition plans are more fully

defined.

1. The funds for the first ship of the DD(X) and LCS classes are

included in the research and development budget line for those

programs in the President’s budget plan for 2004 through 2009.

APPENDIX
60 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

Table A-1.

Estimated Production Schedule for New Surface Combatants, 2005-2025

Ship Class 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

DD(X)a 111233320000000000000

LCSa 110344444444444430000

CG(X)a 000000000122333333333

FFG(X)b 000123344444442100000

Source: Congressional Budget Office.

Note: DD(X) = future general-purpose destroyer; LCS = littoral combat ship; CG(X) = future guided-missile cruiser; FFG(X) = future guided-missile frigate.

a. For the Navy’s 160-ship plan.

b. For Option I only.

Production Cost of the DD(X) Destroyer

CBO estimates that the DD(X) would cost about

$1.9 billion apiece to build, or a total of about $30 billion

for 16 (assuming that the new destroyer has the character

istics and capabilities described in Table 1). Although the

Navy currently plans to buy the first ship with research,

development, test, and evaluation funds, CBO included

those costs in its estimate to measure the total costs of

production more accurately. 

CBO used two methods to calculate the total costs of the

initial DD(X). In the first method, it started with the

Navy’s estimate of the costs for detail design and construc

tion of the initial ship (roughly $2.4 billion) and increased

construction costs by 17 percent to account for the average

cost growth that has occurred in past ship construction

programs.2

 That approach yielded an estimate of about

$2.7 billion for the first ship. In the second method, CBO

used the actual cost of the first Arleigh Burke class (DDG

51) destroyer as an analogy and adjusted that cost for

differences in weight and armament systems between the

DD(X) and the DDG51. That approach also produced

an estimate of about $2.7 billion for the first DD(X). Both

of those estimates include about $500 million for non

recurring detail design work. CBO used the Navy’s figure

for that work because it has no basis from which to

develop an independent estimate at this time. The way

in which CBO estimated the remaining $2.2 billion in

recurring production costs under the second method is

described below.

CBO estimated the recurring costs for six elements of the

DD(X)—basic construction; electronics; hull, mechanical,

and electrical (HM&E) systems; ordnance; other costs;

and change orders (see Table A2). Basic construction

includes labor and material costs for assembling the hull

structure as well as the shipbuilder’s profit and other fees.

Electronics includes the costs of governmentfurnished

hardware such as radars, sonars, navigation, and com

munications equipment. The HM&E category includes

Table A-2.

CBO’s Cost Estimate for the

First DD(X) Destroyer

(In billions of 2003 dollars)

Estimated

Cost

Primary Basis

of Estimate

Detail Design 0.5 Navy estimate

Production 

Basic construction 0.7 DDG-51 analogy

Electronics 0.6 Navy estimate

Hull, mechanical, and

 electrical systems 0.1 DDG-51 analogy

Ordnance 0.3 DDG-51 analogy

Other costs 0.2 Navy estimate

Subtotal 1.9

Change orders 0.3 DDG-51 analogy

Total Production Cost 2.2

Total DD(X) Cost 2.7

Source: Congressional Budget Office.

2. See J. A. Drezner, An Analysis of Weapon System Cost Growth (Santa

Monica, Calif.: RAND, 1993); and Karen W. Tyson and others,

The Effects of Management Initiatives on the Costs and Schedules of

Defense Acquisition Programs (Alexandria, Va.: Institute for Defense

Analyses, November 1992).
APPENDIX COST ESTIMATES FOR NEW SHIPS IN THE NAVY’S 160-SHIP PLAN AND CBO’S OPTION I 61

the costs of pumps, motors, cooling systems, piping, and

electrical wiring. Ordnance includes the costs of combat

systems, guns, missile launchers, and other systems related

to the ship’s weapons. Other costs include the costs of

system integration and engineering, equipment testing,

and management support. Finally, the category of change

orders includes costs that result from governmentimposed

modifications to the design of the ship.

CBO based its estimate of the costs of basic construction,

HM&E systems, and ordnance on similar costs for the

first DDG51 and adjusted those costs for the differences

in weight and ordnance between the two ships (as shown

in Table 1). For the categories of electronics and other

costs, CBO did not have enough information about the

DD(X) to make similar adjustments to the DDG51's

costs, so CBO used Navy cost estimates for those two

categories. (Those estimates are significantly higher than

the equivalent costs for the first DDG51.) For the cate

gory of change orders, CBO based its estimate on the rela

tionship between actual changeorder costs and total costs

for the first DDG51. Those change orders amounted to

about 16 percent of total recurring construction costs.

CBO estimated the costs of the other 15 DD(X)s by

analyzing the actual costs of the DDG51s that were

bought during the 19851992 period. That analysis indi

cated that doubling the annual purchase rate reduced unit

costs by about 15 percent. Thus, CBO estimated that the

cost of the second DD(X) would total about $2.2 billion

(the same amount as the first ship minus the nonrecurring

detail design) and that the unit cost of the remaining ships

would fall to $1.7 billion when the production rate rose

to three a year.

Production Cost of the Littoral

Combat Ship

CBO estimates that building 56 littoral combat ships

would cost a total of about $20 billion, or about $350

million per ship (assuming that the Navy buys the LCS

with the characteristics described in Table 1 and on the

schedule shown in Table A1). To estimate the cost of the

first LCS, CBO used the actual costs of buying Oliver

Hazard Perry class (FFG7) frigates as an analogy and

adjusted those costs for technical differences between the

two ships. That approach produced an estimate of about

$700 million for the initial LCS, including about $200

million for nonrecurring detail design efforts. The basis

for that $700 million estimate is outlined below. 

DoD reports actual budgeted costs for weapon systems

in its Selected Acquisition Reports (SARs). CBO analyzed

the final SAR for the FFG7 program and determined that

the cost to build the first FFG7 totaled about $600 mil

lion (in 2003 dollars). CBO increased that amount by

about $100 million to account for differences between

the existing FFG7 frigates and the planned LCS in three

areas.

First, CBO decreased the estimate by about $150 million

to reflect the difference in weight between the LCS (3,000

tons) and the FFG7 (4,100 tons).

Second, CBO increased the estimate by about $50 million

to cover the cost of the additional equipment (called mis

sion modules) that is likely to be required for each littoral

combat ship. Although the Navy has provided few details

about the LCS program, it has stated that it wants a ship

that will be able to quickly swap out mission equipment

to tackle rapidly changing jobs. CBO assumes that the

Navy would need to purchase 70 mission modules for the

force of 56 LCSs. The extra 14 modules (beyond the one

included in the cost of each LCS) would cost about $2.5

billion in all, CBO estimates, or about $50 million per

LCS when amortized across the 56 ships. 

Third, CBO increased the estimate by about $200 million

to account for the cost of detail design. In the 1970s, when

the FFG7 was being built, the Navy did not pay for detail

design work with production funds, as it does now. All

of the expenses of that work for the FFG7 program were

included in research and development funds, which totaled

about $100 million in today’s dollars. CBO assumes that

the $200 million for the LCS is appropriate because it falls

within the range of the detail design costs for the FFG7

and the equivalent costs for the DD(X). The Navy has

not indicated what the cost would be for detail design

work for the LCS.

CBO estimated the costs of the succeeding 55 littoral

combat ships using statistical analyses of the costs of the

FFG7s bought during the 1970s. Those analyses show
62 TRANSFORMING THE NAVY’S SURFACE COMBATANT FORCE

Table A-3.

CBO’s Cost Estimate for the First CG(X) Cruiser

(In billions of 2003 dollars)

Estimated Cost Primary Basis of Estimate

Detail Design 0.5 DD(X) estimate

Production 

Basic construction 0.8 Adjusted DD(X) estimate 

Electronics 0.6 Adjusted DD(X) estimate 

Hull, mechanical, and 

electrical systems 0.1 DD(X) estimate 

Ordnance 0.6 Adjusted DD(X) estimate

Other 0.2 DD(X) estimate

Subtotal 2.3

Change orders 0.4 Percentage of production costs

Total Production Cost 2.7

Total CG(X) Cost 3.2

Source: Congressional Budget Office.

that costs decline as production rates increase. The unit

cost for the FFG7 fell by 20 percent when the annual

purchase rate doubled. On the basis of that relationship,

CBO estimated that the remaining LCSs would cost an

average of $350 million apiece.

Production Cost of the CG(X) Cruiser

The future CG(X) cruiser is even less well defined than

the littoral combat ship. The Navy suggests that it would

share many features with the DD(X) destroyer. It would

be a large, multimission surface combatant and use the

same hull form, propulsion plant, and basic combat

systems as the DD(X). A key difference between the

DD(X) and CG(X) is that the new cruiser would probably

be equipped with a nextgeneration air and missile defense

combat system that included advanced radars. Also, the

CG(X) would be expected to trade the advanced gun sys

tems on the DD(X) for additional vertical launch system

(VLS) cells. Building 32 CG(X) cruisers would cost a total

of about $70 billion, or an average of about $2.2 billion

per ship, CBO estimates (assuming that the Navy bought

the CG(X) with the characteristics described in Table 1

and on the schedule shown in Table A1). The initial ship

of that class would cost about $3.2 billion (see Table A3).

To calculate the cost of the first CG(X), CBO started with

its estimate of $2.7 billion for the initial DD(X) destroyer,

since the two ships will be roughly the same size and share

many of the same features. CBO then raised that amount

by about $500 million to account for differences between

the ships in four areas. First, CBO increased the estimate

for ordnance by $250 million to capture the increased cost

of the stateoftheart weapon system that would probably

be installed on the new cruiser. (CBO used the cost of the

existing Aegis system as the basis for the cost of that next

generation weapon system.) Second, CBO boosted the

estimate for basic construction by about $100 million to

account for the increase in construction costs from

installing the new weapon system. Third, CBO raised the

estimate for ordnance by another $75 million because it

assumed that each CG(X) would have 200 VLS cells

instead of the 128 cells planned for the DD(X). Fourth,

CBO increased the estimate for change orders by $75

million so that the cost of those orders would equal about

16 percent of total recurring construction costs.

To estimate the costs of the remaining 31 CG(X)s, CBO

derived a costestimating relationship using the same

analysis it used for the DD(X). That analysis indicates that

a doubling of the annual purchase rate reduces unit costs
APPENDIX COST ESTIMATES FOR NEW SHIPS IN THE NAVY’S 160-SHIP PLAN AND CBO’S OPTION I 63

by about 15 percent. Thus, CBO estimated that the aver

age cost of the other new cruisers would be about $2.2

billion.

Production Cost of the FFG(X) Frigate

For the new frigate envisioned in Option I of this study,

CBO estimated an average cost of $700 million per ship

(assuming that the FFG(X) followed the production

schedule in Table A1).3

 Building 40 FFG(X) frigates

would cost about $28 billion in all, CBO estimates. 

Much as it did in calculating the cost of the first littoral

combat ship, CBO estimated the cost of the initial

FFG(X) by starting with the actual cost to build the first

FFG7 (about $600 million). CBO increased that amount

by about $500 million to account for three major differ

ences between the FFG7 and the FFG(X). First, CBO

increased the estimate by about $250 million to reflect

the difference in weight between the new frigate (6,000

tons) and the existing one (4,100 tons). Second, CBO

raised the estimate by about $50 million to cover the costs

of the additional VLS cells that the FFG(X) is assumed

to have. Third, CBO included an estimated $200 million

for detail design to account for the cost of such work not

included in the cost of the first FFG7. (That figure is the

same amount that was included in the cost estimate for

the first LCS.)

The cost estimate for the other 39 FFG(X)s is based on

an analysis similar to the one used to derive LCS costs.

That analysis suggests that doubling the annual purchase

rate reduces unit costs by about 20 percent. Thus, CBO

estimated that the other new frigates would cost about

$700 million apiece, on average.

3. It also assumed that the FFG(X) had the following characteristics:

a displacement of 6,000 tons, a crew of about 120, a modern

combat system suite, 48 VLS cells, two helicopters, and one 5inch

gun capable of firing the extendedrange guided munition.