Penny Wise and Pound Foolish: The Navy’s Carrier Construction Strategy

Details of the President’s Fiscal Year (FY) 2020 budget have emerged, and carrier construction likely will be a major controversy. The Defense Department is looking to reshape military forces for great power conflicts, and the Navy had several viable approaches for adapting its carrier force to the new defense strategy. Instead, it opted to avoid a decision and will waste billions of dollars as a result. Funds for shipbuilding are too scarce to waste. It’s time to make a decision about carriers.

The Navy’s fleet is built around a small number of extremely expensive but powerful carriers. The carriers themselves cost approximately $13 billion. When the embarked air wing and escorts are included, the cost rises to more than $30 billion.¹ Paying that bill and the associated operating and maintenance costs dominates the Navy’s budget. For that large cost, carriers provide immense capability that has ruled the seas since 1941. In crisis after crisis and in regional conflicts from Korea to Afghanistan, carriers have proven their usefulness.

The challenge is that the 2018 National Defense Strategy focuses on great power competition that foresees “a more lethal and disruptive battlefield, combined across domains, and conducted at increasing speed and reach.”  Carriers often have struggled to make a place for themselves in this kind of environment. In the 1980s, carriers had long-range aircraft, including the A-6 and F-14, that could provide some standoff distance. The fielding of shorter ranged FA-18 and F-35 aircraft, combined with adversaries’ longer range fires, has made carriers increasingly vulnerable. Many naval strategists argue that the future lies in distributed operations, undersea capabilities, unmanned systems, or some combination.

Faced with this dilemma, there were three coherent strategies that the Navy might have adopted for carrier construction:

• Stretch construction to eight-year “centers.” This would slowly reduce the number of carriers from the current 11 to about 7 over a period of time, acknowledging their declining role but still keeping them in the structure for the indefinite future. A key advantage would be immediate savings (about $1 billion per year when fully implemented) that could be applied to other capabilities.
• Continue the recent strategy (FY 2017 shipbuilding plan) of overhauling existing carriers and procuring a new one every five years. This would maintain the carrier force at 11 through the 2030s, declining to 10 thereafter.
• Fund two carriers in FY 2019/2020 on an accelerated schedule, overhaul existing carriers, and move toward a force of 12, as the most recent naval force structure assessment and many naval strategists recommended. This would be part of a broad naval expansion tied to a rising budget.

Instead, under pressure from the Office of the Secretary of Defense to reduce the number of carriers, the Navy has chosen a fourth path that maximizes costs: retire an existing carrier early without an overhaul (the USS Harry S. Truman [CVN-75]) and buy two new Ford-class carriers in a single procurement action. Overhauling an existing carrier costs about $5.5 billion and gains 25 years of service life, for a cost of $220 million per carrier year (that is, the amortized cost of having one carrier for one year). Buying a new carrier costs approximately $13 billion. When combined with the midlife overhaul (assuming that is done), the cost of new construction is $370 million per carrier year. If the midlife overhaul is not done, then the cost is $520 million per year. Bottom line: The Navy has chosen the highest cost path.

In five years, the Navy will face the same problem: it needs to keep buying carriers if it wants to keep the industrial base viable but, at the same time, if it needs to reduce the carrier fleet, it will retire the next carrier early (probably the USS John C. Stennis [CVN-74]). 

Further, the Navy is talking about a follow-on to the Ford class that would be less expensive. There are arguments for and against such an approach, but if that is where the Navy wants to go, why buy two Ford-class carriers if the design is unsuitable?

In contrast to its wasteful approach to carrier construction is the Navy’s approach to amphibious ship construction. There, the Navy faces the same challenge: Do scarce and expensive ships that must operate close to enemy territory fit with a strategy that foresees long-range engagements and precise munitions? The Navy is apparently proposing to delay the LSD replacement program (LPD-17 Flight II) and consider other approaches that would, presumably, entail less expensive ships that are more numerous and could support a more distributed warfighting concept. This plan does not propose throwing away expensive existing ships or buying additional ships that the emerging concept sees as unsuitable. Instead, it makes a gradual transition to a new concept.

Rather than wasting scarce shipbuilding funds, the Navy needs to make a decision. Either carriers will continue to be the backbone of the fleet, in which case the Navy should continue to build new carriers and overhaul the old ones. Or the Navy will move to a more balanced fleet that retains carriers but at a lower level and puts more funds into distributed, undersea, and unmanned capabilities. In that case, the Navy should overhaul the existing carriers but build new carriers at a slower rate. There are valid arguments for each approach; however, the Navy should not waste billions of dollars equivocating between the two choices.