Congressional Budget Office January 6, 2016 2016 Outlook for Navy - - PowerPoint PPT Presentation

Congressional Budget Office

Presentation at the 2016 Defense Outlook Forum

January 6, 2016

Eric J. Labs Senior Analyst for Naval Forces and Weapons

This presentation presents data from and includes other information published in CBO's An Analysis of the Navy’s Fiscal Year 2016 Shipbuilding Plan (October 2015), www.cbo.gov/publication/50926.

2016 Outlook for Navy Shipbuilding

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CONGRESSIONAL BUDGET OFFICE

Outline

■ The Navy’s 2016 shipbuilding plan ■ CBO’s estimate of the cost of the 2016 plan ■ The problem of lead ships ■ A larger fleet or not? ■ A fleet that conforms with historical funding

– Potential impact of the Ohio Replacement Program

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Ship Purchases Under the Navy’s 2016 Plan and Recent Actions by the Congress and the Department of Defense (DoD)

Ship Type Plan 2016–2020 Actions by the Congress and DoD Plan 2016–2025 Actions by the Congress and DoD Aircraft Carriers 1 1 2 2 Ballistic Missile Submarines 1 1 2 2 Attack Submarines 10 10 18 18 Destroyers 10 11 20 21 Littoral Combat Ships and Guided Missile Frigates 14 6 29 17 Amphibious Ships 3 3 8 8 Other Support Ships 10 11–12 24 25–26

__________ __________________ __________ __________________

Total 48 43–44 103 93–94

Congressional action in fiscal year 2016: Added 4 ships in 2016 (some may have been brought forward from future years). DoD plans to buy 12 fewer littoral combat ships starting in 2017.

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The Navy’s Estimates of the Average Annual Costs of New-Ship Construction Under Its 2015 and 2016 Plans

Billions of 2015 Dollars Average Annual Funding, 1986 to 2015 Navy's Estimate, 2015 Plan Navy's Estimate, 2016 Plan 2016 to 2025 2026 to 2035 2036 to 2045 30-Year Average 5 10 15 20 25 30

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CONGRESSIONAL BUDGET OFFICE

The Navy’s Estimates for New-Ship Construction, 2016 to 2025

Billions of 2015 Dollars 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 5 10 15 20 25 Average for First Five Years ($14.9 billion) Average for Second Five Years ($18.9 billion) Historical Average ($13.9 billion)

Congressional Appropriation Above the President's Request

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CONGRESSIONAL BUDGET OFFICE

Requested and Appropriated Shipbuilding Budgets Under the Budget Control Act

Billions of 2015 Dollars

The white dashed line indicates the estimated shipbuilding budget, calculated as the historical share of the Department of Defense’s base budget under the BCA, as that act stood at the time of each year’s budget submission.

President's Request Appropriated Funds 2012 2013 2014 2015 2016 5 10 15 20

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CONGRESSIONAL BUDGET OFFICE

Average Annual Shipbuilding Costs Under the Navy’s Plan, by Decade

Near Term (2016–2025) Midterm (2026–2035) Far Term (2036–2045) 30-Year Average (2016–2045) Navy Estimates (Billions of 2015 Dollars) New Ship Construction 16.9 17.2 15.2 16.5 Plus Carrier Refuelings 18.3 18.2 15.9 17.5 Plus All Other Items 19.5 18.8 16.5 18.3 CBO Estimates (Billions of 2015 Dollars) New Ship Construction 18.2 19.2 17.8 18.4 Plus Carrier Refuelings 19.6 20.2 18.4 19.4 Plus All Other Items 20.7 20.8 19.0 20.2 Percentage Difference New Ship Construction 8 12 17 12 Plus Carrier Refuelings 7 11 16 11 Plus All Other Items 6 11 16 10

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CONGRESSIONAL BUDGET OFFICE

Cost Growth in Lead Ships, 1985 to 2015

Percent

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Short- and Long-Term Challenges to Increasing the Size of the Fleet

■ Budget Control Act ■ Broad federal fiscal environment ■ Debate on amount of defense spending ■ High deployment rates may wear ships out faster ■ Renewed focus on Europe may reduce emphasis on naval forces

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Short- and Long-term Factors Favoring a Larger Fleet

■ Construction momentum ■ Rising tensions in the Asia-Pacific region ■ Congress has been increasing shipbuilding budgets

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The Impact of the Ohio Replacement Program on Navy Shipbuilding

Billions of 2015 Dollars

Historical average for Navy shipbuilding includes new ship construction, refueling of aircraft carriers, ship conversions, outfitting and postdelivery costs, and other items.

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CONGRESSIONAL BUDGET OFFICE

CBO’s Estimates of Annual Shipbuilding Costs Under the Navy’s 2016 Plan

Billions of 2015 Dollars 2010 2015 2020 2025 2030 2035 2040 2045 5 10 15 20 25 30 Amphibious Warfare Ships Small Surface Combatants SSNs Combat Logistics and Support Ships Aircraft Carriers and Carrier Refuelings Large Surface Combatants SSBNs Other Items

Under the Navy's Plan Actual

Average Annual Funding, 1986 to 2015

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CONGRESSIONAL BUDGET OFFICE

A Fleet that Conforms With Historical Funding Levels

Purchases Inventory in 2045 Ship Navy’s Plan Historical Funding Navy’s Plan Historical Funding Aircraft Carriers 6 6 10 10 Ballistic Missile Submarines 12 12 12 12 Attack Submarines 45 34 50 37 Destroyers 65 46 82 64 Littoral Combat Ships 67 44 57 34 Amphibious Warfare Ships 23 15 33 27 Support Ships 46 35 61 53

______________ ______________ ______________ ______________

Total 264 192 305 237

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Definitions

AOE = fast combat support ship CVN = nuclear-powered aircraft carrier DDG = guided missile destroyer JHSV = joint high speed vessel LCS = littoral combat ship LHA = amphibious assault ship LPD = amphibious transport dock MHC = coastal mine hunter MLP = mobile landing platform SSBN = ballistic missile submarine SSN = attack submarine T-AKE = ammunition cargo ship