CONGRESS OF THE UNITED STATES CONGRESSIONAL BUDGET OFFICE CBO Preserving the Navy’s Forward Presence With a Smaller Fleet MARCH 2015 Notes Unless otherwise indicated, all dollar amounts in this report reflect budget authority in 2014 dollars, and all years are federal fiscal years (which run from October 1 to September 30 and are designated by the calendar year in which they end). Numbers in the text and tables may not add up to totals because of rounding. On the cover: U.S.S. McCampbell (DDG 85), Yokosuka, Japan, July 2014. U.S. Navy photo by Mass Communication Specialist Seaman Amanda S. Kitchner. CBO www.cbo.gov/publication/49989 Contents Summary 1 What Size Fleet Could the Navy Maintain With Smaller Shipbuilding Budgets? 1 How Could the Navy Maintain Its Forward Presence Under Smaller Shipbuilding Budgets? 3 The Navy’s 2015 Shipbuilding Plan 4 Shipbuilding Under Smaller Budgets 4 What Would Smaller Shipbuilding Budgets Buy? 6 What Would Be the Policy Implications of Smaller Budgets? 7 What Would Be the Implications for the Shipbuilding Industry? 8 Maintaining a Forward Presence With a Smaller Fleet 8 Increasing the Length and Frequency of Deployments 10 Basing More Ships Overseas 12 Rotating Crews 14 Analysis of Approaches to Maintaining a Forward Presence 16 Forward Presence Under an Annual Shipbuilding Budget of $16 Billion 17 Forward Presence Under an Annual Shipbuilding Budget of $14 Billion 17 Forward Presence Under an Annual Shipbuilding Budget of $12 Billion 20 Cost Implications 21 Appendix: Comparison of Different-Sized Fleets Under Two Approaches to Maintaining Forward Presence 25 List of Tables and Figures 28 About This Document 29 CBO Preserving the Navy’s Forward Presence With a Smaller Fleet Summary Navy may have difficulty affording its plans. The Chief In support of its mission to deter conflict or fight in wars of Naval Operations’ emphasis on forward operations if necessary, the Navy considers it a core responsibility to indicates that the Navy has committed to maintaining maintain a forward presence—to keep some of its fleet far the largest possible forward presence under any given 3 from U.S. shores at all times in areas that are important budget plan. to national interests. Toward that end, at any given time, about one-third of the fleet is deployed overseas. The rest What Size Fleet Could the Navy Maintain With of the Navy’s ships are in or near their home ports in the Smaller Shipbuilding Budgets? United States for maintenance, training, or sustainment CBO assessed the effects of three smaller annual ship- (a period in which a ship is in port but ready to deploy building budgets—$16 billion, $14 billion, and quickly). Most of the ships that contribute to the Navy’s $12 billion—for the next 30 years. In all three cases, by current forward presence of about 100 ships sail from 2044, the fleet would be smaller than would be the case ports in the United States; 31 others are now stationed under the Navy’s current plan: permanently in foreign countries or at overseas U.S. mili- tary bases. In the future, the Navy expects to boost the Under the $16 billion budget, by 2044, the fleet proportion of ships that it bases abroad. would consist of 251 ships, 17 percent fewer than under the Navy’s current plan; The Congressional Budget Office estimates that, for the next 30 years, the Navy’s 2015 shipbuilding plan (which Under the $14 billion budget, it would be 230 ships, aims to increase the fleet from 281 ships in 2014 to 24 percent fewer than under the current plan; and 306 ships by 2022) would cost about $21 billion annu- ally, on average, in constant 2014 dollars.1 The Navy’s Under the $12 billion budget, it would be 208 ships, estimates set the figure somewhat lower—at about 31 percent fewer than under the current plan (see $19 billion per year.2 Both estimates are greater than the Table 1). annual average of almost $16 billion that the Navy has spent for the past three decades, which suggests that the Those estimates reflect an assumption that the Navy would reduce the number of its major warships—aircraft 1. See Congressional Budget Office, An Analysis of the Navy’s Fiscal carriers, surface combatants, submarines, and amphibious Year 2015 Shipbuilding Plan (December 2014), www.cbo.gov/ warfare ships—in rough proportion to their current share publication/49818. All dollar amounts presented in this report are of the fleet. in 2014 dollars. 2. See Department of the Navy, Report to Congress on the Annual 3. See Department of the Navy, Chief of Naval Operations, CNO’s Long-Range Plan for Construction of Naval Vessels for FY2015 Sailing Directions (accessed March 12, 2015), http://go.usa.gov/ (July 2014), http://go.usa.gov/FYZR (PDF, 3.4 MB). feez (PDF, 163 KB). CBO 2 PRESERVING THE NAVY’S FORWARD PRESENCE WITH A SMALLER FLEET MARCH 2015 Table 1. Fleet Characteristics and Costs of Maintaining the Navy’s Forward Presence Under Various Shipbuilding Budgets, 2044 Average Annual Shipbuilding Budget $16 Billion $14 Billion $12 Billion Fleet Inventory, 2044 251 230 208 Reduction in Ships From Navy Plan (Percent) 17 24 31 Annual Cost Savings, Operation and Support (Billions of 2014 dollars)a 61013 Approach 1: Increase the Length of Deployments for U.S.-Based Ships Ships Providing Forward Presence At Any Given Time 113 111 108 Deployment Length/Operating Cycle (Months) Type of Ship Aircraft carrier 10/36 6 and 6/36b 7 and 7/36b Large surface combatant 10/36 6 and 6/36b 7 and 7/36b Attack submarine 7/24c 7/24c 7/24c Amphibious warfare ship 8/27 9/27 9/27 Cost (Billions of 2014 dollars) Annual recurring Less than 0.5 Less than 1 Less than 5 Onetime 000 Key Challenges to Implementation - Retention of Sailors Because of Long Deployments - Endurance of Crews in Future Crises - Ship Maintenance Approach 2: Base More Ships Overseas and Use More Rotating Crews Ships Providing Forward Presence At Any Given Time 113 112 110 Additional Ships Based Overseas, Additional Ships With Rotating Crews Type of Ship Aircraft carrier 1, 0 1, 0 2, 0 Large surface combatant 4, 0 4, 6 5, 10 Attack submarine 7, 6 7, 8 9, 10 Amphibious warfare ship 2, 0 2, 2 2, 2 Cost (Billions of 2014 dollars) Annual recurring Less than 1 Less than 5 Less than 10 Onetime 3 to 10 3 to 10 16 to 25 Key Challenges to Implementation - Building Overseas Capacity - Adapting to New Rotation Procedures - Keeping the Fleet Secure Source: Congressional Budget Office. Note: All costs are in billions of 2014 dollars. a. Figures are for operation and support savings before adjustment using either Approach 1 or Approach 2. b. The U.S.-based aircraft carriers and large surface combatants would conduct two 6- or 7-month deployments over the 36-month operating cycle. c. Some attack submarines would conduct 7-month deployments and some would conduct 6-month deployments. CBO MARCH 2015 PRESERVING THE NAVY’S FORWARD PRESENCE WITH A SMALLER FLEET 3 How Could the Navy Maintain Its Forward Presence report, longer deployments are less expensive than buying Under Smaller Shipbuilding Budgets? larger fleets. Costs increase for longer deployments The Navy could maximize its forward presence with because sailors are paid more while they are at sea, ships smaller budgets by expanding the use of three methods consume more fuel, and equipment must be replaced that it currently applies to boost overseas operations: sooner because it wears out faster. But the additional operating costs of longer deployments would be consider- Deploying ships for longer periods, ably less than the savings that would result from the lower procurement costs and smaller operating budgets Basing more ships and their crews overseas, and required to maintain smaller fleets. As a result, by CBO’s estimate, this approach would save between $11 billion Assigning more than one crew to some ships to permit and $17 billion per year, depending on the size of the longer deployments. fleet. Even under smaller budgets, CBO found, the Navy could Several disadvantages, sometimes with accumulating expand its use of each method to maintain the current forward presence, although all three involve costs and effects, can arise from longer periods at sea. For example, pose disadvantages. And even though the Navy might be if the ships must be deployed quickly because of a crisis or able to maintain its forward presence by making more use a war, crew members who have already been at sea for an of those methods, smaller fleets would nonetheless reduce extended time could be tired. Longer deployments sub- the service’s ability to implement its war plans in the ject sailors and families alike to added stress, which might event of conflict and would limit its flexibility in a crisis hamper the Navy’s retention of crew members. Higher short of war. sea pay or larger retention bonuses might or might not mitigate that problem. If ships are away from home ports The Navy also could use different mixes of those methods more often or for longer periods, maintenance schedules to maintain its forward presence. To illustrate a range of could be disrupted or altered; if that resulted in less effec- possibilities, CBO analyzed two basic approaches: The tive or less timely maintenance, ships might not be able first would simply lengthen many ships’ deployments; the to remain in the fleet until the end of their expected ser- second would combine the other two methods into a sin- vice lives.