If More Money Buys a Smaller Fleet, What Will Less Money Buy?

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Navy photo / Photographer’s Mate 1st Class Jim Hampshire

The sun rises behind the aircraft carrier USS Theodore Roosevelt as it prepares for another day supporting the war in Afghanistan.

First of three articles

During the third debate of the presidential campaign, President Obama hammered Mitt Romney with a clever retort when Romney pointed out—accurately—that the U.S. Navy had become “the smallest since 1917.”

“We also have fewer horses…the nature of our military’s changed. We have these things called aircraft carriers….”Romney appeared to have been caught flat-footed and had no rebuttal, nor even an explanation of what he meant by his numerical comparison of today’s Navy with the fleet of 1917.

All over the internet I read comments about how foolish Romney was to not understand that the 2012 Navy could easily sink the one we had in 1917; he clearly did not understand—they said—that today’s navy was infinitely more capable: It may have been shrinking in numbers of ships in recent history, but each one is more effective—not only compared to any 1917 museum pieces, but also to what is being replaced now.

Moreover, no foreign navy can even begin to compare, they say: we have more aircraft carriers and at-sea strike aircraft than the rest of the world combined; we can deliver infinitely more precision-guided weapons than the U.S. Navy of Operation Desert Storm in 1991, and, as one widely-respected analyst put it, “the more than 8,000 missile launchers on our surface fleet give it missile firepower greater than the next 20 navies combined….in all cases exceeding or greatly exceeding the rest of the world’s fleet’s combined.”

Just like Romney’s “smallest since 1917,” the data portions of these statements may be technically accurate, but they also are irrelevant, if not misinforming: the threats we face at sea are neither from the Kaiser’s High Seas Fleet nor from anyone seeking to mirror image the U.S. force.

The threats our Navy faces, just like the rest of our armed forces, come from known and unknown enemies who study us and are developing—more accurately, already have developed—potential ways to defeat us.

Against those real threats, we are in terrible shape—possibly worse than we were in 1917 relative to the naval threat from the Kaiser. And, if we proceed with business as usual, the threats loom only larger.

Shrinking Numbers

If numbers mean anything — and they do — we are headed in the wrong direction. Even if it is not President Obama’s conscious plan to shrink the Navy from its current number of 284 “battleforce” ships to 250, as Romney and his surrogates disingenuously charged, that shrinkage—perhaps more—is what is very likely to happen.

Keep in mind that since 2001, the Navy’s “base” budget (not including the additional amounts to fight the wars in Iraq, Afghanistan and elsewhere) increased dramatically. However, since 2001 the size of the Navy’s battlefleet shrank.

According to the Congressional Research Service, during the George W. Bush years (2001-2008), the fleet shrank 11% (from 316 ships to 282) as the Navy’s “base” (non-war) budget grew 51% in inflation-adjusted (“constant”) dollars. With continuing budget increases, Obama has managed to increase the fleet since 2008 by a grand total of two ships, to 284. These trends are longstanding: for decades, the unit-cost of ships growing at a rate higher than the budget has meant more money buys fewer ships.

Recent analysis from the Congressional Budget Office shows that the prospects for the Navy’s growing in the future are quite dim. CBO estimates that to implement the Navy’s current 30-year shipbuilding plan (to increase the fleet from 284 to the projected 310 to 316 warships) will require average annual spending of $22 billion, not the $17 billion the Navy estimates. However, even the Navy’s unrealistically-low projection is well above the $11 billion for shipbuilding in the Navy’s 2013 budget, or the $12 billion it plans to seek, on average, for the next five years.

Congressional Budget Office

It is completely unrealistic to anticipate even the Navy’s low-ball future spending levels: No one is anticipating the kind of Pentagon spending increases these higher shipbuilding figures will require, and for naval shipbuilding even to retain its current level of spending, let alone increase, will require it to “eat” spending elsewhere in the Navy’s budget, or in one of the other military services’ budgets.

Congressional Research Service

Neither is particularly likely.

The Navy also seeks increases in other parts of its own budget, especially in other forms of procurement, specifically for the F-35C fighter-bomber (which will cost multiples to buy and operate compared to existing F-18 aircraft). As the Pentagon’s and the Navy’s budgets shrink in the foreseeable future, the money for an expanded Navy is simply not there.

In October, Admiral Mark Ferguson, the vice chief of naval operations, testified to the inevitable naval force reductions; he estimated that the budget levels contemplated by the Budget Control Act’s sequestration—i.e. spending levels just nine percent below currently projected spending levels—could result in a fleet somewhere between 230-235 ships in about ten years. It is possible that Obama’s current budget negotiations with the Republicans on Capitol Hill may end up with a Pentagon budget not at low as that mandated by sequestration, at least for the short term. But spending levels even lower—over the longer term—are also highly possible. In any case, the major increases needed for achieving the Navy’s current shipbuilding plan are not going to materialize.

The Effect of Unaffordable Ships and Planning Gimmicks

CBO has testified that a realistic long-term inventory is somewhere between 170 and 270 ships, depending on the type of ships that the Navy seeks to buy. Considering the Navy’s strong preference for high-end ships, the potential for further cost growth and CBO’s substantially higher re-estimates, the number of actual ships is likely to be in the mid-to-lower parts of the 170-270 range.

For example, CBO estimates the new-generation aircraft carrier, CVN-78, to cost $14.2 billion, not the $13.1 billion the Navy projects; CBO projects the “Flight III” DDG-51 to cost $2.4 billion, not $2.2 billion, and another study found that CBO estimate may be $1.2 billion too low. Also, CBO estimates the existing Littoral Combat Ships to cost $770-800 million and the for total program average to be $500 million per ship; meanwhile the Navy projects a $440 million unit cost (all in constant dollars). The Navy’s habitual under-estimating its own costs simply means that still more money in the future can buy only fewer ships, and if costs are even higher than CBO’s estimate, which CBO says may happen, it all gets worse.

None of this is helped by the way the Navy bureaucracy games its own shipbuilding plans. For example, although the Navy reduced the number of ships in the 2013 30-year ship building plan, compared to the 2012 plan, the cost of the new—smaller—plan is actually higher (again in constant dollars): the Navy removed many lower cost ships and added higher cost ones, while reducing the total number only marginally.

In doing so it also dropped 24 logistics ships which it knows will have to be added back in later on, thereby insuring that the funds projected to complete the fleet are even more inadequate, and proving CBO was right to say that its own estimates may be too low.

In addition, the Navy arbitrarily assumed ships, such as destroyers, would have a lifespan of 40 years, rather than the 30 years that such combatants have typically served. Recently, the Navy has attempted to retire some ships even before 30 years.

Finally, to achieve its increased fleet, the Navy’s immediate plan is to decrease the number of ships built each year: with a plan that requires an average of nine ships to be built each year, the Navy plans to reduce the number of ships procured to seven in 2014 and eight in 2015. In as much as it is the near term budgets that are the ones that actually occur, the short term plan to reduce shipbuilding should be taken as prologue for the most likely budget future.

Put simply, the Navy’s under-estimates of its own costs, unrealistic projections of what money will be available, and shipbuilding plan gimmicks all add up to a fleet that will be declining in numbers, even with increased funding.

The precise size of the future fleet is unknown, but it is unreasonable to expect it to retain its current size. The shrinkage will be exacerbated if the Navy retains its multiple shipbuilding psychoses: the number of battleforce ships may tend toward the lesser numbers (approaching 170) that CBO has testified to.

In the likely event of less, not more, money, the negative trends will accelerate.

Part 2: More than the Navy’s numbers could be shrinking

Part 3: Is the fleet steaming forward or backward?

Winslow Wheeler is the Director of the Straus Military Reform Project of the Center for Defense Information, a part of the Project on Government Oversight in Washington, D.C.