Carrier Costs

The carrier Ford’s construction costs seem way out of line even allowing for traditional first-in-class elevated costs.  In fact, carrier costs seem to have been increasing over and above simple inflation increases.  Those are my impressions at any rate.  Let’s take a look at some data and see what the situation really is.

The table below shows inflation adjusted construction costs for the nuclear carriers of the Nimitz class and the Ford.  Costs are obtained from the GAO report referenced in the table.  GAO cost figures are about as good as can be had in the public domain.

After adjustment for inflation – meaning all costs are set to FY19 dollars – the costs should all be identical if we were just making serial copies at the same relative cost.  Alternatively, if costs are decreasing due to serial production savings, as so many commenters want to claim, then we should see decreasing costs for each subsequent carrier.  Conversely, if carrier costs are increasing over and above mere inflation, as is my feeling, then we should see increasing cost figures.  Examine the table.

Carrier Construction Costs – Inflation Adjusted 2019 Dollars *
CVN-68 Nimitz (1)	$8.5B
CVN-69 Eisenhower (1)	$7.7B
CVN-70 Vinson (1)	$7.5B
CVN-71 Roosevelt (1)	$8.4B
CVN-72 Lincoln (1)	$8.6B
CVN-73 Washington (1)	$8.5B
CVN-74 Stennis (1)	$9.2B
CVN-75 Truman (1)	$8.5B
CVN-76 Reagan (1)	$9.1B
CVN-77 Bush (2)**	$7.4B
CVN-78 Ford (2)	$13.5B

* Costs for CVN68-76 were taken from Figure 3.2 in Ref 1 and adjusted for inflation.

** Bush costs are suspect and probably reflect the beginning of the accounting games that the Navy began playing with ship costs.

What does the table tell us?

Nimitz.  As expected, the cost of the first-in-class Nimitz is higher than the next couple of carriers.

Trend.  The cost trend shows a steady rise of around $1.5B from the early CVN-69 to the later CVN-76.  That’s an increase of $1.5B over and above inflation.  That’s real increases for reasons unknown.  The Nimitzes are, indeed, as serial a production run as the Navy gets.  Yes, each carrier undoubtedly had small changes but there was nothing particularly major over the course of the run.  So why did the costs increase?  I have no idea but it is clear that carrier costs are rising faster than inflation.  Serial production savings are a myth.

Bush.  As noted, the Bush costs were highly suspect and likely reflect Navy accounting games which began in earnest around that time.  Obviously, the Bush didn’t suddenly drop from around $9B for the previous carrier to $7B.  Also, if we think the Bush numbers are artificially/fraudulently low, what does that tell us about the purported Ford costs?!  We know Ford has been racking up additional construction costs since delivery even though the ship has been supposedly paid for.  The true cost of Ford is likely around $15B by now.

Ford.  The Ford, while a first-in-class, blows any reasonable first-in-class increase out of the water.  The magnitude of the real cost increase is stunningly staggering.  Staggeringly stunning?  Unbelievable!  Yes, the Ford had some new technologies inserted but the basic carrier construction is the same as a Nimitz.  The new tech (EMALS, AAG, weapon elevators, dual band radar) add some cost but none come close to accounting for the increase.  Bear in mind that this is construction costs only.  The development costs for the new tech are staggering but those are not included. 

While some might be tempted to write the Ford costs, staggering as they are, off to first-in-class, we should note that the second and third Fords are also projected to be around $12B each and we know with 100% certainty that those cost estimates will go up!  So, the Ford costs are not just first-in-class costs but real, albeit stunning, cost increases for unknown reasons.

The overall conclusion is absolute, if unexplainable: carrier costs are rising faster than inflation.  I have no idea why carrier costs are rising faster than inflation and without access to a detailed, itemized cost list, I can’t begin to explain it. 

Because of the escalating costs, we are pricing ourselves out of the carrier business.  Carrier numbers have dropped steadily from the 20’s to 15 to 11 to our current 9+1+1 (9 carriers + 1 in long term refit + 1 non-functional Ford).  The Navy has, at least twice, floated/attempted the idea of early retiring a carrier to drop the fleet from the statutory requirement of 11 to 10.  Given the runaway costs, look the Navy to push hard to early retire a carrier in the near future.  Before you protest, recall that we only have 9 air wings which means we can only operate 9 carriers, at most.  Nine air wings makes a tiny bit of sense in a 9+1 fleet but not in a 10+1.  Sooner or later, Congress is going to ask why we need 11 carriers when we only have 9 air wings.  If/when the Ford joins the fleet, we’ll have two carriers without aircraft.  Do you really think the Navy is going to continue to operate 11 carriers when 2 don’t have aircraft?

We desperately need to rethink our carrier construction philosophy.  Carriers are increasing in size at the same time that the air wings are shrinking.  There’s a logic disconnect there.  We’ve doubled the cost of carriers by building the Ford class with no commensurate increase in combat capability and, objectively, we’ve decreased combat capability by installing an EMALS that can’t be repaired without shutting down every catapult (and weapon elevator?) and decreased our willingness to risk a carrier in combat due to the massive cost.  We need to return to basic carriers.  I’d prefer returning to the Forrestal pattern (especially with the smaller air wings) but even a return to the Nimitz pattern would save several billion dollars per carrier!!!!!!!!!

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(1)General Accounting Office, “Navy Aircraft Carriers”, Aug 1998, Figure 3.2, p.77

(2)CRS, “Navy Ford (CVN-78) Class (CVN-21) Aircraft Carrier Program: Background and Issues for Congress”, Ronald O’Rourke, Apr-2008