Congressional Briefing - June 12, 2006

Why Has the Cost of Navy Ships Risen?

Presented by Dr. Mark Arena, Associate Director, RAND's Acquisition and Technology Policy Center

Monday, June 12, 2006
12:00-1:30 P.M.
2247 Rayburn House Office Building
Lunch will be provided

Over the past four decades, the growth of U.S. Navy ship costs has exceeded the rate of inflation raising concerns for many in the Navy and the government. This real growth in Navy ship costs means that ships are becoming more expensive and outstripping the Navy’s ability to pay for them. Given current budget constraints, the Navy is unlikely to see an increase in its shipbuilding budget. Therefore, unless some way is found to get more out of a fixed shipbuilding budget, ship cost escalation means that the size of the Navy will inevitably shrink.

Dr. Mark Arena will present the findings and recommendations of a newly released RAND report that explored four primary questions:

  • what is the magnitude of ship cost escalation;
  • how ship cost escalation compares with other areas of the economy and other weapon systems;
  • what are the sources of ship cost escalation; and
  • what might be done to reduce or minimize ship cost escalation.

Related Research

Why Has The Cost of Navy Ships Risen? — May 31, 2006

U.S. Navy ships

Over the past four decades, U.S. Navy ship costs have exceeded the rate of inflation. As a result, it is becoming more difficult to afford the ships that the fleet needs. Limiting growth in features and reconsidering the mission orientation of ships may help reduce costs.

Full Document