CBO warns Navy underestimates cost of shipbuilding program

////CBO warns Navy underestimates cost of shipbuilding program

CBO warns Navy underestimates cost of shipbuilding program

The Navy has underestimated the cost of its long-term shipbuilding program by 18 percent, according to the Congressional Budget Office (CBO).  The Navy is required by law to report each year on its shipbuilding requirements, plans, inventories, and costs of its long-term program covering the next 30 years.  Congress generally asks CBO to review and analyze these reports.  The Navy’s latest plan, released in February of this year, increases the proposed size of the fleet from earlier plans, but reduces the number of ships and the cost of new ships to be constructed.  However, CBO estimates that the total cost of completing the FY2011 plan would be much higher than the Navy projects.  For example, CBO believes that the 2011 plan, which calls for building 276 ships between 2011-2040, will not support the desired total fleet size of 322 or 323 ships.  CBO believes that the Navy's cost estimates are too low because they do not include activities typically funded in the budget such as refueling nuclear-powered ships and outfitting new ships.  CBO also estimates that labor and material costs will grow much faster than the Navy expects. CBO does acknowledge that some of the total differences are due to different assumptions on design and capabilities of future ships.

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