Why Are US Shipbuilding Costs Rising?

Earlier DID articles have covered the issue of increasing US shipbuilding costs from various points of view – see esp. “Costing the CVN-21: A DID Primer” and “RAND: UK Offers Shipbuilding Industry Lessons for USA.” Now RAND turns its attention more fully to the US Navy and shipbuilding industry. Its summary page notes that:

“Over the past several decades, the increases in acquisition costs for U.S. Navy amphibious ships, surface combatants, attack submarines, and nuclear aircraft carriers have outpaced the rate of inflation. To understand why, the authors of this book examined two principal source categories of ship cost escalation: economy-driven factors (which are outside the control of the Navy) and customer-driven factors (features for which the Navy has the most control). The authors also interviewed various shipbuilders to find out their views on other issues contributing to increasing costs. Based on their analysis, the authors propose some ways the Navy might reduce ship costs in the future, including limiting growth in features and requirements and reconsidering the mission orientation of ships. It is recognized, however, that such reductions come at a cost, since the nation and the Navy understandably desire technology and capability that is continuously ahead of their competitors.”

The full, 124-page report can be found here in PDF format.

Additional Readings

• House Armed Services Seapower and Expeditionary Forces Subcommittee (July 30/09) – Hearing on Efforts to Improve Shipbuilding Effectiveness. See Video Part 1 / Part 2 / Part 3 || Gene Taylor [D-MS] Opening Statement || PDF submissions from… The Honorable Sean J. Stackley, Assistant Secretary of the Navy Research, Development, and Acquisition | Vice Admiral Kevin McCoy, Commander, US Naval Sea Systems Command | Michael Petters, President of Northrop Grumman Shipbuilding | Mr. David Heebner, Executive Vice President of Marine Systems at General Dynamics | Mr. Ronald E. Ault, President of the Metal Trades Department at the AFL-CIO | Mr. Brett Olson, Business Representative of the International Brotherhood of Electrical Workers (IBEW), Local 46