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Published: 2005

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Rising procurement costs for Navy ships have recently emerged as a matter of concern for both Navy officials and some Members of Congress who track Navyrelated issues. Combined with constraints on ship-procurement funding, these rising costs have caused the Navy to reduce planned ship procurement rates. The issue for Congress is how to respond to rising Navy ship procurement costs. Aside from reducing planned ship procurement rates, one option would be to reduce Navy ship procurement costs by shifting from currently planned designs to designs with lower unit procurement costs. Lower-cost designs for attack submarines, aircraft carriers, larger surface combatants, and smaller surface combatants have been proposed in recent reports by the Congressional Budget Office (CBO), DOD's Office of Force Transformation (OFT), and the Center for Strategic and Budgetary Assessments (CSBA). Options for lower-cost designs can be generated by reducing ship size; shifting from nuclear to conventional propulsion; shifting from a hull built to military survivability standards to a hull built to commercial-ship survivability standards; or using a common hull design for multiple classes of ships. Compared to the current Virginia-class nuclear-powered attack submarine (SSN) design, lower-cost options include a non-nuclear-powered submarine equipped with an air-independent propulsion (AIP) system and a reduced-cost SSN design using new technologies now being developed. Compared to today's large, nuclearpowered aircraft carriers, lower-cost options include a medium-sized, conventionally powered carrier based on either the LHA(R) amphibious assault ship design or a commercial-like hull, and a small, high-speed carrier using a surface effect ship (SES)/catamaran hull. Compared to the current 14,000-ton DD(X) destroyer design, lower-cost options include a new-design 9,000-ton surface combatant (SC(X)), a 6,000-ton frigate (FFG(X)), or a low-cost gunfire support ship. Compared to the current 2,500- to 3,000-ton Littoral Combat Ship (LCS) design, lower cost options include a 1,000- or 100-ton surface combatant. The FY2006 defense authorization bill (H.R. 1815) as reported by the House Armed Services Committee (H.Rept. 109-89) contains provisions that establish procurement cost caps on several Navy shipbuilding programs, direct the Navy to begin developing a lower-cost destroyer and a lower-cost nuclear-powered submarine, and create a new program for U.S. shipyards aimed in part at improving the efficiency and cost-effectiveness of the construction of Navy ships. The committee's report expressed concern regarding rising Navy ship procurement costs. In its report (S.Rept. 109-69) on the FY2006 defense authorization bill (S. 1042), the Senate Armed Services Committee expressed concern for the Navy's shipbuilding program and the committee's belief that significantly higher funding is required in the shipbuilding budget. In its report (H.Rept. 109-119) on the FY2006 defense appropriations bill (H.R. 2863), the House Armed Services Committee expressed concern over instability in Navy shipbuilding programs and rising ship costs. This report will be updated as events warrant.