2020/12/18 Forecast International: Washington Releases Lame-Duck Shipbuilding Plan that Requires $45 Billion in Offsets

The plan maintains a requirement for 11 aircraft carriers. In October, Esper said that the carrier fleet could have dropped to as few as eight ships. However, he also outlined plans for a new class of light aircraft carriers that would have taken some of the strain off the larger ships. The new shipbuilding plan doesn’t include any new light carriers, and indicates that further study of cost-effective light carrier capabilities and capacity is required. If the Navy eventually adopts a formal requirement for a light carrier force, the number of super carriers could possibly be cut.

The plan calls for nine LHA/LHD big deck amphibious warships, down from the current inventory of 10. Those ships would be supplemented by 57 smaller amphibious warships, including a new class of Light Amphibious Warships (LAW) desired by the Marine Corps. The total amphibious fleet would increase from 33 ships today to 66 by FY45.

The current large surface combatant force of 91 destroyers and cruisers would drop to 74 ships by FY45. The future large surface combatant fleet is at the low end of the FNFS options, which ranged from 73-88 ships. The Navy’s previous 2016 Force Structure Assessment called for 104 large surface combatants. The reduction is offset by planned growth in the small surface combatant fleet, which is slated to increase from 30 to 66 ships by FY45. The FNFS called for between 60 and 67 small surface combatants.

A key goal of the FNFS was to bolster the Navy’s attack submarine fleet. When Esper discussed the plan in October, he said that if the Navy makes only one change, it should be to increase procurement rates for the Virginia class sub. The new shipbuilding plan anticipates a fleet of 72 attack subs by FY45, up from the current inventory of 54 and the 2016 FSA goal of 66 subs. The new plan also includes a new Large Payload Submarine that would enter service in the 2040s as a follow-on to the SSGN cruise missile submarines.  The last of the SSGNs, which are Ohio class ballistic missile subs modified to carry conventional cruise missiles, is scheduled to retire in FY27. The first Large Payload Submarine isn’t expected to be delivered until FY49, according to the shipbuilding schedule, around which time the attack sub fleet will have grown to 80. The shipbuilding plan also consists of the 12 planned Columbia class ballistic missile subs that will replace the Ohio class.

The combat logistics force will reach 69 ships by FY45, the low end of the FNFS options, compared to the current force of 29 ships. There will also be 33 support vessels, which is in line with the current inventory of 34 ships.

All of the ships discussed above would result in a battle force of 403 ships by FY45, up from 296 today and the Navy’s previous goal of 355 ships. The FNFS outlined a requirement for between 382 and 446 battle force ships.

Adding to the battle force would be a fleet of 143 unmanned platforms, including 119 unmanned surface vehicles and 24 unmanned subsurface vehicles. This mix reflects the low end of the FNFS, which called for from 143-243 unmanned systems. The Navy plans to buy 12 Large Unmanned Surface Vehicles from FY23-FY26, as well as one Medium USV and eight Extra-Large Unmanned Undersea Vehicles (XLUUV). Including unmanned vessels, the FY45 Navy fleet goal rises to 546 ships, compared to the high end of 688 ships in the FNFS.

Compared to the FY21 five-year budget outlook, the FY22-FY26 shipbuilding plan would fund three more Virginia class submarines; two more DDG 51 destroyers; six more FFG(X) frigates; one less LPD Flight II amphibious ship; 10 Light Amphibious Warships, which were not included in the FY21 plan; six more expeditionary fast transports; six next-generation logistics ships, which were also not included in the FY21 plan; five more T-AO fleet oilers; one more T-AS(X) submarine tender; one less T-ATS Towing, Salvage and Rescue vessel; and one more T-AGOS(X) ocean surveillance ship.

These extra ships come at a price. The Navy wants to spend $22.8 billion for new ship construction in FY22, which is 22 percent more than the $17.8 billion projected in the FY21 budget request. The service then wants $28.8 billion in FY23, $28 billion in FY24, $33.9 billion in FY25, and $33.6 billion in FY26. Overall, the Navy is seeking $147.1 billion for 82 ships from FY22-FY26, a 43 percent increase in funding over the previous $102.8 billion five-year plan that funded 44 ships. These figures don’t include other ship construction costs or funding for unmanned vessels that could add another $15 billion to $20 billion or more over the five- year period.

Government watchdogs like the Congressional Budget Office have warned in the past that the Navy was underestimating the cost of its old 355-ship plan, and noted the service would require record shipbuilding budgets to meet that goal. The new long-term shipbuilding plan requires even more funding, some of which would now have to be siphoned from other services. In a fiscal planning framework accompanying the shipbuilding plan, the administration identified $45 billion in potential offsets from other areas of the budget over the course of the Future Years Defense Program. The framework says that more than $35 billion will be saved over the FYDP through troop drawdowns overseas and by reducing the Afghanistan Security Forces Fund and eliminating the Counter-Islamic State of Iraq and Syria Train and Equip Fund. Another $6.6 billion would come from divesting legacy systems over the course of the FYDP. The Army would also be subject to a modest end-strength reduction of 1,700 troops spread across the active force, the Reserves, and the National Guard.

The planning framework proposes an FY22 topline budget of $759 billion for national defense, including $721.9 billion specifically for the Pentagon. Over the next five years, the defense budget would grow by the projected rate of inflation of 2.1 percent per year. These figures line up with the projections in the FY21 budget request. Notably, those projections were drafted before the pandemic decimated the economy, and even a second Trump administration likely would have had difficulty sustaining those numbers. While President-Elect Joe Biden has said he doesn’t plan to significantly cut defense spending, the Pentagon may see some reductions.

Ultimately, the lame-duck budget and shipbuilding proposal represent an attempt to put pressure on the incoming administration. Nevertheless, Biden’s team will tweak the budget proposal before it is officially delivered to Congress next year, as is customary with incoming administrations. In the end, the new shipbuilding proposal will likely undergo changes, whether in the pending FY22 budget request or in the FY23 request, which will be the first budget drafted fully under Biden’s watch.