Shipbuilding Costs

I'm always interested in program costs and "true" costs are often hard to find.  The LCS program, for example, has widely varying reported costs.  Anyway, here are a few program costs of interest as reported by the Department of Defense in the Selected Acquisition Report (SAR) to Congress.  These costs should, therefore, be as accurate as possible.  They include R&D costs.

CVN-78 Class, Qty=3, Unit Cost = $14B

Virginia Class, Qty=30, Unit Cost = $3.1B

LCS, Qty=55, Unit Cost = $672M (includes govt supplied equipment but not modules;  add another $100-$200M or whatever you think a module might cost to get the total cost)

DDG-1000, Qty=3, Unit Cost = $7.0B

JSF (all versions), Qty=2457, Unit Cost = $161M


The most interesting program, for me, is the LCS.  You'll note that the true cost of the LCS is not the $450M or so that the Navy claims.  That contracted cost is strictly for the hull and very few people realize that.  All the weapons, sensors, electronics, software, etc. are supplied by the government from another cost accounting source.  The Navy was badly stung by the cost overruns on the LCS program;  so bad, in fact, that Congress imposed a maximum cost cap of around $450M.  To meet the Congressional cap and to avoid more bad publicity, the Navy came up with the creative (fraudulent) accounting method of contracting for just the hull so that they could meet the cap and publicly claim that cost was under control.  We see here that the true cost is exactly what the cost for the original two units was.  There has been no savings from serial production as the Navy has tried to claim.

Remember, though, that the cost reported here is still without a module.  The only actual module cost data point is the single module that was delivered for $200M and then was subsequently rejected.  So, the true cost of an LCS is the hull + govt supplied equipment + module, or $672M + module.  Adding in $100M - $200M for a module gives an LCS cost of around $800M - $900M.  Of course, some of the early, stripped down, limited capability modules may cost less. 

Compare this true cost to the original target of $200M for the entire ship and you realize what a stunning cost escalation has occurred.  It's even more amazing when you consider that the current LCS is the stripped down version that has undergone rigorous cost cutting (like removing the corrosion control measures!).  So much for a small, expendable ship. 

The DDG-1000 is also seen to be hideously expensive but around half of that is R&D.  Still counts, though!

Given that the total Navy annual shipbuilding budget is $15B, you can see why we're building fewer and fewer ships.  The costs are simply out of control.