Independent government auditors estimate that the US Navy’s latest long-term shipbuilding plans will be 46 percent more expensive than historical congressional appropriations and 17 percent more than the Navy’s own projections.
This analysis is detailed in a new report published on Monday by the Congressional Budget Office (CBO), which is required by law to assess the Navy’s annual 30-year long-range shipbuilding plans. The 2025 version of this document focuses on achieving a fleet of 381 manned ships, a target set forth in the 2023 Navy assessment formally titled the Battle Force Ship Assessment and Requirement report.
Shipbuilding Profiles and Cost Estimates
The latest shipbuilding plan outlines two profiles: one supported by the Biden administration and an alternative that assumes reduced funding from future lawmakers. CBO’s analysis centers on the profile backed by the administration.
“The Navy’s 2025 plan would cost 46 percent more annually in real terms … than the average amount appropriated over the past 5 years,” the report states. “CBO estimates that total shipbuilding costs would average $40 billion (in 2024 dollars) over the next 30 years, which is about 17 percent more than the Navy estimates.”
Moreover, auditors project that to operate and maintain these ships, purchase aircraft and weapons, and fund the Marine Corps, the total Navy budget would need to increase from $255 billion today to $340 billion by 2054. (CBO routinely adjusts its estimates to account for the effects of future inflation.)
Challenges in Predicting Costs
Historically, the Navy’s cost estimates tend to be more optimistic than those of the CBO. Predicting future shipbuilding costs necessitates making several assumptions about labor and material costs, as well as the capabilities and specifications of new vessels. The further out the estimate reaches, the less certainty analysts have regarding the final cost. The disruption caused to the defense industrial base by the COVID-19 pandemic illustrates the challenges of forecasting costs that were unpredictable before 2020.
Both CBO and the Navy recognize that costs for the 2025 plan have risen compared to the three options presented in the 2024 shipbuilding plan. Auditors’ projections show an increase of between 7 and 16 percent, while the Navy’s estimates range from 5 to 14 percent.
Unpredictable Future Costs
“The growth in costs reflected in the Navy’s and CBO’s estimates for the 2025 plan is attributable to both an increase in the estimated costs of many shipbuilding programs and to the larger number of ships that the Navy would purchase under that plan compared with what it would have purchased under the alternatives in the 2024 plan,” according to CBO’s report.
One critical cost that neither CBO nor the Navy can currently predict is the expense of the future unmanned fleet. The Navy’s 2023 assessment concluded that the fleet should contain 134 unmanned ships, but given the technology’s nascent stage—and uncertainties regarding that fleet’s final makeup—the new report does not provide any price estimates for it.
