The Navy’s Constellation class frigate cost estimates were fraudulent
optimistic in the extreme and everyone except the Navy knew that (and the Navy
undoubtedly knew it also which is what makes it fraud). The Navy’s estimate for the entire initial 10
ship contract was $8.7B (2020$ [3]) or $870M per ship.
Unsurprisingly, the Congressional Budget Office (CBO) estimate was
$12.3B which is 41% higher than the Navy’s.[1]
The CBO report lists the various absurd assumptions that went into the
Navy’s lowball estimate and you can read the report if you’re interested in
digging into it. In the meantime, let’s
take a quick check and see how the actual costs are shaking out, so far.
From the FY22 Navy budget document [2, Volume 1-217], we get
the following Constellation costs:
|
|
Year
|
Total Obligation Authority
|
|
FFG-62
|
2020
|
$1.3B
|
|
FFG-63
|
2021
|
$1.0B
|
|
FFG-64
|
2022
|
$1.1B
|
|
FFG-64
|
2023
|
$1.2B
|
Note: FY23 cost is
from the FY23 Navy Budget Highlights document
Remember the Navy’s claims that the Constellation cost would
drop significantly after the first one?
That’s not happening! If the
Navy’s estimate is to hold, the remaining 6 frigates will have to cost an
average of $683M. Does anyone believe
that will happen? At the moment, it
appears that the CBO cost estimate is going to be just about spot on.
Note: The costs cited above do not include things
like post-delivery outfitting, Government Furnished Equipment (GFE), warranty
repair costs absorbed by the Navy, phased delivery costs, etc. The itemized breakdown of what is and isn’t
included in the budget is unknown. The
real ship construction cost is much higher but we’ll stick with the ‘official’
costs for now.
Below is the Constellation construction budget breakdown, by
the way (numbers rounded to nearest million).[2, Volume 1-219] For those of you who still believe that
‘steel is cheap and air is free’ and that electronics constitute the major cost
of a modern ship, you’ll note the basic hull structure is far and away the
major portion of the cost, more than doubling the electronics cost which makes
up only 21% of the total.
|
Constellation Budget Breakdown
|
|
Plan Costs
|
$131M
|
12%
|
|
Basic Construction/Conversion
|
$584M
|
54%
|
|
Change Orders
|
$23M
|
2%
|
|
Electronics
|
$231M
|
21%
|
|
Hull, Mechanical, and Electrical (HM&E)
|
$17M
|
2%
|
|
Ordnance
|
$52M
|
5%
|
|
Other Cost
|
$49M
|
4%
|
Just to give you a frame of reference, here’s a list of the
type of items that are included in each category as they often do not make
sense. Hull, Mechanical, and Electrical,
for example, does not include the hull or most electronics!
Construction
Basic hull and superstructure construction
Electronics
Enterprise Air Surveillance Radar
Aegis Weapon System
SQQ-89 ASW
SLQ-32v6 SEWIP
IFF/TACAN
CEC
Inertial Navigation System
EO/IR
SLQ-25 Nixie
Exterior Communication Systems
Internal Networks
Hull, Mechanical,
Electrical
Aircraft Ship Integrated Securing and Traversing System
(ASIST)
Internal Communication (IC) Voice
Advanced Flight Deck Lighting System (AFDLS)
Unclassified Video System (UVS)
Interior Wireless Communication System (IWCS)
Ordnance
Mk 41 VLS, 32-cell
Mk 48 Gun Weapon System
RAM
Nulka
So, there you have it.
In a 100% predictable result, the Navy is, once again, ridiculously low
on its cost estimate.
When a cost estimate is ridiculously off once, it’s a
mistake.
When cost estimates are ridiculously off, every time, for
every program, it’s systematic and, possibly, criminal fraud.
___________________________________
[1]Defense News website, “US Navy’s cost estimate for new
frigate won’t hold water, predicts government analyst”, David B. Larter,
14-Oct-2020,
https://www.defensenews.com/naval/2020/10/14/the-us-navys-cost-estimate-for-its-new-frigate-wont-hold-water-analyst-predicts/
[2]Department of Defense, Fiscal Year (FY) 2022 Budget
Estimates, May 2021
[3]CBO, "The Cost of the Navy's New Frigate", Oct 2020
https://www.cbo.gov/system/files/2020-10/56669-New-Frigate-Program.pdf