American Shipbuilding Association

30-YEAR SHIPBUILDING PLAN WILL
DROP NAVAL FLEET BELOW 300

(Washington, D.C.) - Cynthia L. Brown, President of the American Shipbuilding Association, expressed dismay with the recently released Department of Defense 30-Year Shipbuilding Plan.  Brown stated: "This report is based on flawed assumptions and unrealistic numbers in an effort to justify the Administration's budget for shipbuilding as adequate in maintaining a naval fleet of 306 ships -- the minimum acceptable risk constrained level according to the Department of Defense.

According to an analysis conducted by the American Shipbuilding Association, this plan will not maintain a 300-ship Navy unless the Department of Defense is prepared to make huge investments to keep old ships operating well beyond their intended economical service life.  This practice could in fact place America's Sailors and Marines at greater risks with technologically obsolete and maintenance intensive ships.  

SUMMARY ANALYSIS OF
DOD 30-YEAR SHIPBUILDING REPORT

The ramifications of this report can only be put in context by examining the underlying assumptions used by the Department of Defense in projecting the naval force structure into the future, and the annual build rate required to sustain a fleet of 306 ships.

Underlying Assumptions Flawed:

The report states that the average expected service life of naval ships is 35 years of age.  To arrive at this average age, the report states that attack submarines have a 33-year life, carriers 50 years, combatants 35 years, amphibious ships 40 years, and logistic ships 35 years.   Although it is not impossible for the Navy to keep these classes of ships operating this long, the ships in the fleet today were not designed nor built for a service life of this length.  Ships in the fleet were originally intended to have an economical, useful life as follows:

If operation and maintenance dollars are no object, it is possible to conduct major overhauls and system upgrades on these ship classes to keep them operating past their intended service life.  An analysis is normally done, however, to determine whether the cost of the upgrades and the higher operating costs of older ships are more economical than building new.  In many past cost benefit analyses for certain classes of ships, it has been determined that building new is the more cost-effective approach.  If historical retirement ages, and the intended life expectancy of these ship classes are considered, the average life expectancy of the fleet would be 30 years, rather than 35.

• DOD's 35 year average life would permit an annual required build rate of 8.7, or 9, ships per year for 35 years to sustain 300 ships.  If DOD had used the actual 30-year average service life, the build rate would have been 10 ships per year for 30 years to sustain 300.
• Proposed Ship Construction Plan and Fleet Size:
  DOD's long-range plan does not propose a build rate of more than eight ships per year in any year until 2013.  In fact, the plan recommends an annual average build rate of only seven (7) ships per year between '01 and '13.  Over 30 years, the plan does call for an average build rate of 8.8 ships, but this average is only achieved with increases in ship procurements 13 years from today and beyond.
• A major deficiency in the report is that DOD does not acknowledge the annual build rate of the past eight years -- which has averaged only six ships.   This means that if the required average build rate is 9 ships per year based on a 35-year fleet life expectancy, the Navy will have to recoup the ship shortfall created by procuring less than 9 ships per year in prior years.  Using DOD numbers, the Navy enters '01 with a deficit ship procurement rate of 24 ships in sustaining the 300-ship fleet.  This means the annual average build rate would have to be increased above the 9 ships per year to overcome this deficit -- a reality the plan ignores.
• If the actual 30-year life expectancy was used, the annual average build rate would have to be 10 ships per year.  Given the average rate of only six ships per year for the past eight years, the Navy is entering FY'01 with a 32-ship shortfall in maintaining a 300-ship fleet.  This means the annual average build rate would have to exceed 10 ships per year to overcome the deficit of prior years.
• Earlier Navy planning documents indicated that the fleet would fall to 306 ships by 2003, yet the DOD report does not show the fleet dropping below 306 until 2008.  One must assume that the Navy is prepared to make very significant investments in service life extension overhauls and upgrades to keep the fleet at this level, yet no reference to the dollars required to execute this plan are referenced.  There is also no reference to a cost benefit analysis of Service Life Extension Program’s (SLEP) versus new construction or an identification of the ships that would undergo a service life extension.
• The plan also ignores the Navy's recent POM'02 recommendation that would cut five ships from the budget between fiscal years '02 and '06.  Deferring higher, stable rates of ship production exacerbates a growing bow wave in the out-years that will be extremely expensive to ever buy down.
• Actual Fleet Requirements to Meet Today's Missions:
  The report does indicate that the present fleet of 315 naval ships is stretched very thin and that there are not enough ships to provide the coverage and presence in critical strategic areas called for in the Nation's military strategy.  References are made to critical areas being without an aircraft carrier battle group or amphibious ready group over the past two years.  The report acknowledges that 360 ships may be required to meet the Nation's military requirements. 
• If it is determined in the next Quadrennial Defense Review that 360-ships are required, the report states that procurement of 11 ships per year would be necessary to build the fleet to this level.  This build rate, as discussed earlier, would not increase the fleet to 360 ships.  In reality, an annual build rate of eleven (11) ships for eleven years would be required to make up for the ship production deficit over the past eight years.  After eleven years, the rate could be reduced to 9 ships per year in order to return the fleet to 300 based on DOD's 35-year service life.
• Even if 11 ships per year were built for each of the next 30 years, the fleet size would not reach 360 ships by 2030, nor would it ever.  This is a direct consequence of deficit ship construction over the past eight years.

Conclusion:

It appears this report was driven by current budgets rather than requirements.  This plan, if executed, would not sustain a 300-ship Navy into the future unless huge investments were made to keep old ships operational well beyond their intended and historical service life.