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Armed Services Committees Look to Make Fiscal Room for Naval Shipbuilding Plans

Members of Congress and Navy officials were wringing their hands late last year over a roughly $60 billion shortfall forecast between 2021 and 2035 in the Navy’s 30-year shipbuilding plan.

Two-thirds of that expected shortfall would result from the $93 billion program to replace the Navy’s Ohio-class nuclear-powered ballistic missile submarines. Such a cost might reduce the amount the Navy would have to buy some other kinds of ships, with the result that it would take two decades for the Navy to increase its battle force from its current 288 ships to its goal of 306.

The House and the Senate Armed Services committees have a solution, though. They have included provisions in their respective fiscal 2015 defense policy bills (HR 4435, S 2410) that, with a stroke of the president’s pen, could significantly relieve the strain on the Navy’s shipbuilding plans.Rather than pay for the submarines from the Navy’s regular budget, the bills would create a special National Sea-Based Deterrence Fund to cover the cost of the Ohio-class submarine replacement.

By elevating the submarine program directly under the control of the secretary of Defense — not unlike the Missile Defense Agency — lawmakers hope to avoid having the Navy’s top priority competing for money with its other warships, at least directly. With both committees supporting the idea, it is a virtual lock to become law.

The effect on the submarine program, senior congressional aides and experts say, is probably negligible because the Navy favors it over any other warship program. But the effect on the Navy’s shipbuilding account, which has typically ranged between $13 billion and $15 billion in recent years, could be significant, particularly if lawmakers and the Navy decided to maintain the same levels of budget authority for the account.

“The implications are enormous,” said Gordon Adams, who once oversaw the Pentagon’s budget while at the Office of Management and Budget. Adams is now a professor at American University. “The Navy wanted to get rid of this burden on the shipbuilding account.”

The shortfall represents about $4 billion annually over a 15-year period, or roughly 1 percent of the defense budget, Navy officials argue. Elevating the missile boat to the Defense secretary level potentially strengthens the case for funding the sub.

The new deterrence fund “allows the services to fight for what they view as core missions,” rather than making painful trade-offs between those core missions and a strategic mission they perform, Adams explained.

Costly Submarine

The Navy’s proposed fiscal 2015 budget requests $1.2 billion for continued research and development work on the Ohio replacement, a program to design and build a new class of 12 ballistic missile submarines to replace the Navy’s current force of 14 Ohio-class subs.

The ballistic missile submarines are the only class that carry nuclear weapons. The Navy also has nuclear-powered attack submarines and nuclear-powered cruise missile submarines.

The Navy intends to begin buying the first submarine of the line in fiscal 2021. In May 2013, it estimated the procurement cost of the lead ship in the program at $12 billion.

“The Navy in April 2014 estimated the average procurement cost of boats two through 12 in the Ohio replacement program at about $5.36 billion each in FY 2010 dollars, and is working to reduce that figure to a target of $4.9 billion each in FY 2010 dollars,” wrote Ronald O’Rourke, a naval analyst with the Congressional Research Service, in a June 4 report on the program.

Despite efforts to drive down costs — some experts suggested the subs could cost as much as $10 billion each, given the military’s recent acquisition record — lawmakers are concerned the subs would choke other portions of the shipbuilding budget.

“It is not the Ohio-class replacement that benefits from the creation of this new fund,” a senior congressional aide explained. “It will be the other shipbuilding programs that might have been hurt by the Ohio-class replacement that might ultimately benefit.”

Nonetheless, Senate Armed Services, in a report accompanying the bill that would authorize $100 million for the fund, said that creating the new account would ensure “that the program has the appropriate visibility within the administration and within Congress to ensure that the Ohio Replacement Program moves forward with the appropriate level of visibility and management attention.”

This is particularly important because the military writ large will face budget limits (PL 112-25, PL 113-67) for at least eight years after the fiscal 2015 budget is signed into law.

If the ballistic missile submarine program were to remain in the Navy shipbuilding account, it would consume a third to half of the money beginning around 2020.

In a statement after the bill was completed, Sen. Jack Reed, D-R.I., a senior defense authorizer, lauded the creation of the fund.

“Submarines’ unique capability for stealth, strike capacity, and ability to deliver special forces personnel into difficult environments make them an extremely effective force multiplier and deterrent to our adversaries,” Reed said.

General Dynamics Electric Boat, which builds the nation’s submarine fleet, is based, in part, in Rhode Island.

Frank Hoffman, a senior research fellow at the National Defense University, said he hopes the new fund helps. “Otherwise,” he said, “auxiliaries and amphibs and attack boats are doomed.”