CBO says submarine program will be more expensive than Navy's estimates

By Tony Capaccio
Wednesday, May 26, 2010

The Navy's new nuclear-missile submarine could cost, on average, about $1 billion more than the service projects, according to the Congressional Budget Office.

Each submarine could cost about $8.2 billion, or almost 14 percent more than the Navy's estimate of $7.2 billion, the CBO said. The first ship of the class -- typically the most expensive -- could run as high as $13 billion, or $4 billion over the Navy estimate, the nonpartisan agency said in a report released Tuesday.

The president's Nuclear Posture Review issued last month stressed the importance of maintaining the undersea leg of the U.S. triad of nuclear weapons, which also includes land-based missiles and aerial bombs.

The annual report focuses on the budget pressures facing the Navy as it tries to grow from 286 vessels today to at least 313 and as high as 323 over the next 20 years. The submarine's "design, cost and capabilities are among the most significant uncertainties" in the shipbuilding programs, CBO said.

The CBO and Navy cost estimates of the submarine program differ because the Navy priced it "as though it were being built today whereas CBO incorporated the effects that inflation would have on submarines built 10 to 20 years from now," the agency said.

The vessel is still under design, and construction of the first of 12 planned isn't scheduled to begin until 2019. It would be commissioned in 2027.

The new submarines are intended to replace the current Ohio-class fleet, the first of which deployed in 1981.

Northrop Grumman and General Dynamics build the Navy's submarines. Lockheed Martin builds the D-5 Trident nuclear missiles the submarines carry.

Defense Secretary Robert M. Gates cited the new submarine's expense as one example of cost increases that may prove unaffordable in a May 3 speech.

"We have to ask whether the nation can really afford a Navy that relies on $3 billion to $6 billion destroyers, $7 billion submarines and $11 billion carriers," Gates told the annual Navy League conference.

"It is reasonable to wonder whether the nation is getting a commensurate increase in capability in exchange for these spiraling costs."

Navy Secretary Ray Mabus, in a speech three days earlier at the National Press Club in Washington, said of the new submarines: "Those ships, if they cost what we estimate they will cost today, will knock a big hole" in ship budgets.

Should the first submarine cost $13 billion, as the CBO projects, it would be the most expensive Navy vessel ever built -- $1.3 billion more than the USS Gerald R. Ford aircraft carrier scheduled for commissioning in 2015.

About $6 billion would be spent though 2015 for research and development.

A down payment on the first submarine would be authorized in 2015 under the current Navy plan with most of the money authorized in 2019, CBO said. The second vessel would be purchased in 2022, followed by one per year from 2024 to 2033.

-- Bloomberg News

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