Saturday, February 14, 2015

Wait, What Now?

Speaking at the WEST 2015 conference in San Diego, Adm. Michelle Howard, Vice Chief of Naval Operations had this to say about the cost of the Ohio replacement submarine, the SSBN(X) (1),

“We know we’re going to have to replace her and we know the cost for that is going to be on the order of $9 billion a platform."

Does she not know that the official Navy cost estimate is $5.4B with a target of $4.9B each per the Congressional Research Service July 2014 report?

Is she just totally uninformed or did a bit of truth accidentally leak out?

Now, this is not exactly earth shaking news.  The rest of the world has known all along that the SSBN(X) program would cost much, much more than the Navy estimated but to hear the Navy publicly admit it is kind of earth shaking given the line they’ve been trying to sell.

Here’s the scary part, though.  The Navy never even comes close to being right about their cost estimates.  They’re typically around 50% too low.  So, if the Navy is publicly admitting $9B per sub then you can be sure the real cost will be around $14B.  YIKES!


(1) USNI, "WEST: Sea Service Leaders Outline Challenges", John Cannon, February 13, 2015,


9 comments:

  1. The big thing working against the Navy for the per unit costs are:

    1) Single vendor. Military equipment is niche market equipment...so why do we think there are any vendors willing to compete for this stuff? Especially Ohio Replacement. In the private sector, when this is the case, businesses typically in-source to keep costs tightly controlled. The military inexplicably sacrificed that option a while back along with a lot of other in-sourced options....you know what I mean Vern?!

    2) Production run is extremely small. Cost breaks are achieved when the order size is large. The best (only) option here is for the Navy to buy either two 6-boat lots or buy them all in one 12-boat lot to see if EB will commit to some sort of cost break. Since they're the only real vendor, they don't have to.

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  2. The 50% low estimates are rapidly becoming the norm for big ($100,000,000) projects. If the real estimate was used, they would never get financed.

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  3. CNO,

    How does VCNO's math work?

    Projected $2.5b per nuclear-shipyard year x 3.5 years from keel-laid to alpha trials?

    Her $9b couldn't have been based on a bill-of-materials at this stage of development.

    Any thoughts? If those are the numbers, building four boats will be a stretch/impossibility, and we ought to start thinking about the mathematical consequences of that on national policy (as well as immediately depth-limiting the Tridents to extend their lives)


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    1. You lost me there. Where does $2.5B per nuclear-shipyard year come from and where did you get 3.5 years?

      Questions aside, yes, the SSBN replacement is acknowledged by everyone other than the Navy to be an impossibility while still maintaining the normal "everything else" shipbuilding budget. The Navy is pushing to have the SSBN funded outside the Navy, at a higher DoD level. Of course, that simply means that some other service(s) will have their budget(s) reduced accordingly.

      This is one of those cases where the Navy needs to go to Congress and make a convincing case for the SSBNs and request additional funding. Then, it's Congress' responsibility to address the issue. Of course, the Navy has so badly eroded their credibility and goodwill with Congress that they have little influence left.

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  4. Not quite related and not sure if this is really what's happening but interested to see what some on the other side of the pond are thinking:

    http://www.scotsman.com/news/politics/top-stories/replacing-trident-with-jets-would-save-13bn-1-3691227

    Anyone who has looked at UK military spending and what their forces look like today compared to Cold War, GW1 and GW2 should have some serious thoughts about the UK staying in the SSBM business....to me, this sounds like a nice PR move, you get to kill the SSBM/Trident as too expensive and replace it with something "just as good!" and "so much cheaper!" and then a few years down the road, you quietly kill that nuclear deterrent off and voila, you saved a TON OF MONEY and with very little public malaise.....

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    1. NICO, I don't follow naval events on that side of the pond closely enough. Is this something the UK is really considering or is it just nutcase ramblings? The SSBNs are the only really survivable leg of the nuclear triad.

      Does the F-35 carrying a nuclear weapon have the range to reach targets in China, Russia, or wherever?

      The UK SSBN force complements the US in that it increases the survivability of the whole. An enemy must not only contend with the US SSBN force but also the UK, and vice versa.

      If this is just foolish ramblings from a fringe group, hey, we have those, too. If this is something that is being seriously considered then the UK needs to start thinking straight!

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    2. I would not be surprised at all if the UK MoD did want to eliminate the entire nuclear armament. The total UK MoD is now significantly smaller than the USMC and our partner Gator Navy. Especially looking at 6-9 billion per SSBN i can easily see the UK getting out of the nuclear mission.

      Their 2 coventional carriers and attached F-35B air wings are eating most of their budget and a SSBN is going to cost as least as much as a carrier to build if not to operate.

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    3. If that's the case, that the UK can not afford to be a complete, stand alone military force, then they need to consider how they can fit into a UK/US partnership by developing a partial military capability focused on aspects that the US does not have or does not do well. MCM and ASW come to mind.

      I hope the UK's military budget issues are not due to misguided social spending at the expense of the military - a path the US is currently headed down.

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    4. I don't know either how much this article is accurate or just some kind of rant but I am a regular reader of Jane's Defense Weekly so I know that RN has asked the govt to pay for the new SSBN out of the regular budget or get some kind of one time supplemental so it didn't appear to me to be something completely out of the realm of possibility.

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