Inside the Pentagon, Feb. 17, 2011 -- Buying and operating a dozen new nuclear ballistic missile submarines will cost the Defense Department $347 billion over the life of the boats, according to a memo signed this month by the Pentagon's acquisition chief.
The cost projection, included in a Feb. 2 acquisition decision memorandum signed by Under Secretary of Defense for Acquisition, Technology and Logistics Ashton Carter, is much higher than estimates DOD has previously cited for the development and procurement of the 12 SSBN(X) subs slated to replace 14 Ohio-class boomers.
An independent cost estimate -- developed by the Pentagon's cost analysis and program evaluation (CAPE) shop -- projects the department will spend $347.2 billion in then-year dollars for "development, production, operations and support, and disposal for 12 submarines with 16 87-inch diameter missile tubes," Carter writes in the "for official use only" memo addressed to Navy Secretary Ray Mabus. Inside the Pentagon reviewed a copy of the memo, which directs the Navy to fund the program to CAPE's estimate.
The previously undisclosed $347.2 billion figure is the department's first official estimate for the SSBN(X) program's entire life-cycle cost, a Pentagon source said. The Navy does not plan to buy the first sub until fiscal year 2019, but is already working on the design.
The plan to buy 12 subs with 16 87-inch diameter missile tubes "will be sufficient to address the current security environment and associated guidance while maximizing affordability," Carter writes. "I understand, however, that changes to the future security environment could create the possibility for a lower or higher required number of [SSBN(X)] submarines. Analysis of the potential to change the number of submarines will be made as the program progresses."
Carter signed the memo to launch the program's technology development phase following a Dec. 9, 2010, Defense Acquisition Board meeting.
Carter's memo assigns affordability targets to the program in base-year FY-10 dollars. The "average ship end cost" for hulls two through 12 -- taking into account Navy inflation/deflation indices but excluding outfitting and post delivery -- should be $4.9 billion, he writes. And the average annual operations and sustainment cost per unit for hulls one through 12 -- taking into account disposal costs and the Pentagon's inflation/deflation indices -- should be $110 million, Carter adds.
Though the memo directs the Navy to proceed with a design based on 16 missile tubes, it also tasks the service to "conduct a rigorous cost comparison between 16 and 20 missile tube designs" and submit the results for Carter's review within three months. U.S. Strategic Command has argued with the Navy for 20 tubes, Global Security Newswire reported this month.
The memo also directs the Navy to work with DOD officials over the next six months to "identify potential investment opportunities that may drive long-term sustainment cost reductions," develop a business case for them, and present them as initiatives in the Pentagon's FY-13 budget process.
In addition, the memo tells the Navy to submit to Carter "change pages" for the program's technology development strategy. The Navy must include contract strategy details for the FY-12 research and development contract for the SSBN(X) design, the memo adds, noting that Carter expects to review the proposed plans at least three months prior to the release of the request for proposals for that contract.
The Navy will return for a Defense Acquisition Board program review prior to release of that RFP, the memo notes. The service will also return for a DAB program review in one year to assess progress toward achieving the affordability targets identified in the memo, Carter adds.
Further, the memo tasks the Navy with submitting an initial acquisition strategy that includes additional contract details for the FY-15 design/integrated product and process development contract at least three months prior to the milestone B and the planned release of the RFP for that contract.
At a House Armed Services Committee hearing on Wednesday, Defense Secretary Robert Gates said the large procurement costs for SSBN(X) and other programs will pose big challenges for future presidents and sessions of Congress in the years to come.
Deputy Defense Secretary Bill Lynn last year dismissed suggestions that the Navy ought to receive special funding outside its shipbuilding account to cover the massive cost of SSBN(X).
"There isn't a budget class for strategic programs," Lynn told ITP last March. "All of the programs that all of the services have contribute to the nation's security. They don't contribute to the Navy's security; they contribute to the nation's security. So I don't know exactly what the definition of a strategic program is in that context. The suggestion that somehow there's some split there -- that I don't buy."
But Chief of Naval Operations Adm. Gary Roughead this month told InsideDefense.com just the opposite. "What do I believe? I believe it should be above the line," he said, meaning it should be funded outside the Navy's shipbuilding account. And at Wednesday's hearing, Chairman of the Joint Chiefs of Staff Adm. Michael Mullen noted that budgeting for the program at the national level is an option. SSBN(X) could otherwise break the shipbuilding budget, he said.
The Navy's FY-12 budget request seeks $1 billion for SSBN(X) research and development, plus $50 million more in R&D to reduce future construction costs for the program. Deputy Assistant Secretary of the Navy for Budget Rear Adm. Joseph Mulloy told reporters Feb. 14 that SSBN(X) would be an "SSBN version improved, using Virginia-class technology" with better stealth than today's boomers. The Navy will design a new nuclear reactor plant for the program, he said, noting the service is also designing the SSBN(X) weapons system and the hull, mechanical and electrical details. -- Christopher J. Castelli