Thursday, November 14, 2013

Is That Fleet Worth Buying?

The opening statement by Ronald O'Rourke during his October 23, 2013 testimony before the House Armed Services Seapower Subcommittee on the US Navy's FY2014 30-Year Shipbuilding Plan is excellent. The following was his statement regarding the affordability of the 30-Year shipbuilding plan.

In a situation of reduced levels of defense spending, such as what would occur if defense spending were to remain constrained to the revised cap levels in the Budget Control Act, the affordability challenge posed by the 30-year shipbuilding plan would be intensified. Even then, however, the current 30-year shipbuilding plan would not necessarily become unaffordable.

The Navy estimates that, in constant FY2013 dollars, fully implementing the current 30-year shipbuilding plan would require an average of $16.8 billion in annual funding for new-construction ships, compared to an historic average of $12 billion to $14 billion provided for this purpose. The required increase in average annual funding of $2.8 billion to $4.8 billion per year equates to less than 1% of DOD’s annual budget under the revised caps of the Budget Control Act. The Congressional Budget Office estimates that, in constant FY2013 dollars, fully implementing the current 30-year shipbuilding plan would require an average of $19.3 billion in annual funding for new-construction ships, or $2.5 billion per year more than the Navy estimates. This would make the required increase in average annual funding $5.3 billion to $7.3 billion per year, which equates to roughly 1.1% to 1.5% of DOD’s annual budget under the revised caps of the Budget Control Act.

Some observers, noting the U.S. strategic rebalancing toward the Asia-Pacific region, have advocated shifting a greater share of the DOD budget to the Navy and Air Force, on the grounds that the Asia-Pacific region is primarily a maritime and aerospace theater for DOD. In discussing the idea of shifting a greater share of the DOD budget to the Navy and Air Force, some of these observers refer to breaking the so-called “one-third, one-third, one-third” division of resources among the three military departments—a shorthand term sometimes used to refer to the more-or-less stable division of resources between the three military departments that existed for the three decades between the end of U.S. participation in the Vietnam War in 1973 and the start of the Iraq War in 2003. In a context of breaking the “one-third, one-third, one-third” allocation with an aim of better aligning defense spending with the strategic rebalancing, shifting 1.5% or less of DOD’s budget into the Navy’s shipbuilding account would appear to be quite feasible.

More broadly, if defense spending were to remain constrained to the revised cap levels in the Budget Control Act, then fully funding the Department of the Navy’s total budget at the levels shown in the current Future Years Defense Plan (FYDP) would require increasing the Department of the Navy’s share of the non-Defense-Wide part of the DOD budget to about 41%, compared to about 36% in the FY2014 budget and an average of about 37% for the three-decade period between the Vietnam and Iraq wars. While shifting 4% or 5% of DOD’s budget to the Department of the Navy would be a more ambitious reallocation than shifting 1.5% or less of the DOD budget to the Navy’s shipbuilding account, similarly large reallocations have occurred in the past:
  • From the mid-1950s to the mid-1960s, reflecting a U.S. defense strategy at the time that placed a strong reliance on the deterrent value of nuclear weapons, the Department of the Air Force’s share of the non-Defense-Wide DOD budget increased by several percentage points. The Department of the Air Force’s share averaged about 45% for the 10-year period FY1956-FY1965, and peaked at more than 47% in FY1957-FY1959.
  • For the 11-year period FY2003-FY2013, as a consequence of combat operations in Iraq and Afghanistan, the Department of the Army’s share of the non-Defense-Wide DOD budget increased by roughly ten percentage points. The Department of the Army’s share during this period averaged about 39%, and peaked at more than 43% in FY2008. U.S. combat operations in Iraq and Afghanistan during this period reflected the implementation of U.S. national strategy as interpreted by policymakers during those years.
The point here is not to argue whether it would be right or wrong to shift more of the DOD budget to the Navy’s shipbuilding account or to the Department of the Navy’s budget generally. Doing that would require reducing funding for other DOD programs, and policymakers would need to weigh the resulting net impact on overall DOD capabilities. The point, rather, is to note that the allocation of DOD resources is not written in stone, that aligning DOD spending with U.S. strategy in coming years could involve changing the allocation by more than a very marginal amount, and that such a changed allocation could provide the funding needed to implement the current 30-year shipbuilding plan. The alternative of assuming at the outset that there is no potential for making anything more than very marginal shifts in the allocation of DOD resources could unnecessarily constrain options available to policymakers and prevent the allocation of DOD resources from being aligned optimally with U.S. strategy.

As an alternative or supplement to the option of altering the allocation of DOD resources among the military departments, the 30-year shipbuilding plan could also become more affordable by taking actions beyond those now being implemented by DOD to control military personnel pay and benefits and reduce what some observers refer to as DOD’s overhead or back-office costs. Multiple organizations have made recommendations for such actions in recent years. The Defense Business Board, for example, estimated that at least $200 billion of DOD’s enacted budget for FY2010 constituted overhead costs. The board stated that “There has been an explosion of overhead work because the Department has failed to establish adequate controls to keep it in line relative to the size of the warfight,” and that “In order to accomplish that work, the Department has applied ever more personnel to those tasks which has added immensely to costs.” The board stated further that “Whether it’s improving the tooth-to-tail ratio; increasing the ‘bang for the buck’, or converting overhead to combat, Congress and DoD must significantly change their approach,” and that DOD “Must use the numerous world-class business practices and proven business operations that are applicable to DoD’s overhead.”

One potential way to interpret the affordability challenge posed by the Navy’s 30-year shipbuilding plan is to view it as an invitation by the Navy for policymakers to consider matters such as the alignment between U.S. strategy and the division of DOD resources among the military departments, and the potential for taking actions beyond those now being implemented by DOD to control military personnel pay and benefits and reduce DOD overhead and back-office costs. The Navy’s prepared statement for the September 18 hearing before the full committee on planning for sequestration in FY2014 and the perspectives of the military services on the Strategic Choices and Management Review (SCMR) provides a number of details about reductions in Navy force structure and acquisition programs that could result from constraining DOD’s budget to the revised cap levels in the Budget Control Act. These potential reductions do not appear to reflect any substantial shift in the allocation of DOD resources among the military departments, or the taking of actions beyond those already being implemented by DOD to control DOD personnel pay and benefits and reduce DOD overhead and back-office costs. The fact that the Navy in its prepared statement did not choose to discuss the possibility of a changed allocation of DOD resources among the military departments or additional actions to control DOD personnel pay and benefits and reduce DOD overhead and back-office costs does not prevent Congress from considering such possibilities.
Before Congress or the DoD decides whether the US Navy should have additional funding relative to other services to fully fund the US Navy's shipbuilding plan, I think one of the questions that needs to be asked is whether the plan itself is worth fully funding.

The link above takes you to the hearing page, where this testimony by Ronald O'Rourke can be downloaded, but also the prepared statement Eric Labs of the Congressional Budget Office. In Eric Labs testimony there is quite a bit of detailed analysis regarding the Navy's FY2014 30-Year shipbuilding plan. As I reviewed the shipbuilding plan and the numbers provided by Eric Labs, I found myself unsure if I think the US Navy's shipbuilding plan is worth funding. The Navy has argued for their plan each year even as the Navy has adjusted it on the margins every year. The shipbuilding plan, and more specifically the fleet design of the US Navy, is primarily designed in alignment with the prevailing trends in technology of 21st century military power.

There are no technological changes in warfare that have fundamentally altered naval warfare since World War II, when war of the sea was primarily and decisively won by naval forces that attacked from over and under the sea. If anything, the advancement of technologies like nuclear power for submarines combined with the improved range and precision of guided weapons have increased the capabilities of both submarines and aircraft in naval warfare.

The next war at sea will be fought by naval forces over and under the sea, and by military forces in space and cyberspace. This reality is why, for the most part, most ongoing debates regarding US Navy force structure revolve around what ships will do in the next war at sea.

Based on the analysis in the prepared statement by Eric Labs, the FY2014 budget invests $382 billion over the next 30 years in large deck nuclear powered aircraft carriers, large surface combatants, nuclear powered attack submarines, and nuclear powered ballistic missile submarines - what I describe as the Battle Fleet portion of the US Navy. The US Navy will spend around 76% of the entire SCN budget on ships of the Battle Fleet.

Based on the same analysis by Eric Labs, the FY2014 budget invests around $68 billion over the next 30 years for Littoral Combat Ships, the LHA-6 program (well deck variant), and the LX(R) program intended to replace existing LSDs - the ships that I describe as the Flotilla portion of the US Navy. That breaks down as $16 billion on the current LCS program, $13 billion for the LCS(X) program, $15 billion for the LX(R) program, and $22 billion for the LHA-6 program. In total, the US Navy will spend around 13% of the entire SCN budget on ships of the Flotilla.

Here is the problem I see.

The Battle Fleet of the US Navy is organized for a single function: to defeat, deter, or cooperate with the military forces of another state, and through the organization of Carrier Strike Groups different ships within the Battle Fleet can be organized together towards a strategic object. The Flotilla of the US Navy is organized for two functions: to support the Battle Fleet in its primary function or to deliver Marines or material overseas. No ships of the Flotilla are designed to actually operate within the organization of the Battle Fleet, although individual ships of the Battle Fleet can operate with individual ships of the Flotilla.

The Flotilla of the US Navy today - FFGs, LCS, PCs, JHSVs, MCMs, other single purpose ships, preposition ships, and amphibious ships - has no organization within itself. Yes, amphibious ships are organized with themselves, but they do not organize with other elements of the Flotilla. No one aspect of the Flotilla is designed to work as part of a larger organization with other parts of the Flotilla. Unlike the Battle Fleet in nearly every way, each ship of the Flotilla is designed to perform a specific, single function, and no ship of the Flotilla is designed to operate as part of a larger organization towards a strategic object.

The future Flotilla appears to be nothing more than a resourced restrained new version of the existing Flotilla, suggesting the future US Navy looks exactly like the present US Navy - a navy organized to defeat, deter, and cooperate with military forces of other states, and only capable of achieving strategic objects that are obtainable if performing those functions.


With a US Navy capable of performing a specific strategic function for the nation, and only strategic functions specific to other states; and considering the US Navy exceeds capabilities and capacity of every state the United States might find itself in competition with, the question I ask myself is why should the US Navy shipbuilding budget be fully funded? I don't think there is any question the US Navy is operationally and tactically brilliant, and I think the US Navy fleet is very well designed for naval warfare in the 21st century, but at the end of the day, the strategic value of US seapower is limited when the US Navy is organized for only a small, very specific set of strategic functions.

At a time when 90% of all trade globally is at sea, when the territorial disputes are taking place at sea, when the economic system is dependent upon the resources being retrieved at sea, and when non-state actors have never had greater capacity to threaten US economic and national security interests than they do today, the US Navy is organized around the false belief that superior military power that only functions with or against military forces of other states will somehow insure strategic success for the US in the 21st century.

Until US naval forces are being organized to achieve a broader set of strategic objectives by sea for the nation, I see very little strategic value in investing in the US Navy fleet as designed unless Congress determines the only threats globally worth the resources of the US Navy are those of other states, because under the current plan, the US Navy has almost no resources or flexibility to achieve a broad range of strategic objectives relevant to the age we live in on behalf of the nation.

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