Pentagon buying chief: Navy can’t ‘hide’ nuclear sub fleet’s $60 billion price tag

The Navy will have to find room in its annual shipbuilding budget for its $60 billion nuclear-powered submarine program, a senior Pentagon official said this week.

With each new nuclear-powered sub expected to cost around $5 billion, Navy officials have for some time said paying for a dozen models would “squeeze” their shipbuilding budget and threaten shrinkage of their future surface vessel fleet.

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As a remedy, some Navy and Pentagon officials had publicly floated the idea of keeping the projected shipbuilding budget intact and paying for some portion of the Ohio-class replacement — also called SSBN(X) — fleet’s development and procurement via other accounts.

That’s not going to happen because “you’re not going to hide $60 billion,” Pentagon acquisition chief Ashton Carter told Rep. Ander Crenshaw (R-Fla.) during a House Appropriations Defense subcommittee hearing.

Carter said that message came straight from outgoing Defense Secretary Robert Gates.

Pentagon officials have pressed the Navy to pare the costs of the program after initial estimates were too high.

The sea service answered by trimming the projected cost of each submarine to $6 billion, defense officials said. 

Pentagon and Navy officials have set an ultimate price goal of $4.9 billion per sub. Navy officials are planning to buy 12 of the new underwater vessels.

“Even with this cost-reduction effort, some observers are concerned that procuring 12 SSBN(X)s during the 15-year period FY2019-FY2033, as called for in Navy plans, could lead to reductions in procurement rates for other types of Navy ships during those years,” Congressional Research Service analyst Ronald O’Rourke wrote in a recent report.

The sea service is slated to spend $1.2 billion on the submarine program in 2013, $1.5 billion in 2014 and $1.9 billion in both 2015 and 2016.

Through 2014, those funds would be for research and development work. Procurement funds would kick in during 2015.

In the study, O’Rourke suggests lawmakers press naval officials on “the likelihood that the Navy will be able to reduce the average procurement cost of boats 2-12 in the program to the target figure of $4.9 billion each in FY2010 dollars.”

He also recommended Congress look at “the accuracy of the Navy’s estimate of the procurement cost of each SSBN(X).” Lawmakers also should question the program’s affordability and “its potential impact on other Navy shipbuilding programs.”

To pare costs, O’Rourke laid out several potential moves, including loading the SSBN(X)s with fewer ballistic missiles; stretching out the procurement schedule; using two-year funding to buy them; and the plan Carter dismissed, using non-shipbuilding account monies.