Wednesday, March 23, 2011

The Cost Value of Tomahawk Cruise Missiles

From Sandra Erwin at the National Defense Magazine Blog.

In the Libya operation to enforce a no-fly zone, the Navy so far has launched 161 Tomahawk cruise missiles that, according to a senior U.S. Navy official, cost between $1.4 million and $1.5 million apiece. The Navy is so well stocked that it can fire up to 255 of these weapons a year without making a significant dent in its budget, or its capabilities to replenish supplies, said the official, who was speaking off-the-record at a private meeting. The Navy purchases 196 Tomahawks each year. In economic terms, the official said, the missiles are “sunk costs” that already have been incurred and could not be recovered.

From a military tactical standpoint, the Tomahawk is the perfect weapon to use in the initial stage of a conflict such as this one, says Eric Wertheim, military analyst and author of "Combat Fleets of the World."

“That’s where the risk is the highest” and the military wants to avoid putting airplanes in harm’s way, he says.

When million-dollar weapons were used in the past, complaints about their price tag didn’t make headlines the way they are now. That may be one reason why the Pentagon did not deploy a Navy aircraft carrier off the coast of Libya, says Wertheim. “It sends a strong message that we are not going to be dominating for the duration of this campaign and we do not want to hold the lion’s share of the burden.”
According to the Navy.mil website, a Tomahawk missile has a Unit Cost of approximately $569,000 in FY99 dollars. They are indeed "sunk costs" because of the multi-year purchase nature of the contracts that keep stores current - contracts that I have been led to believe kept costs for Tomahawks down. There is a pretty wide difference between $569,000 in FY99 dollars and between $1.4 million and $1.5 million today, in fact in FY11 dollars the difference is somewhere around $600 million a unit if my green book math is right.

Two destroyers and three submarines have put 161 Tomahawks in Libya. I'd be curious if every other nation in the coalition combined has conducted 161 strike sorties in Libya to date, because I bet the answer is no. In that context, I'd like to highlight the value of Tomahawk missiles, rather than just focus on the cost.

In my opinion, all of these discussions on Tomahawk missile costs are missing the mark if the subject is operational costs for Libya. Just wait until Congress gets the gas bill for all the tanker sorties. I'll wager any fool who wants to bet that energy costs will be a major budget discussion in defense sooner rather than later, because the gas bill for the DoD in 2011 is going to be enormous.

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