Should Further U.S. Submarine Production Be Postponed?

The current U.S. attack submarine production program is coming to an end. After decades of building three or more submarines annually, there have been no construction starts since 1991. It is generally believed that the current fleet of Los Angeles-class attack submarines is big enough to meet U.S. security needs for many years. Superficially, it may seem appropriate, especially given budgetary constraints, to suspend submarine production for a period of time.

At some point in the future, however, it will be necessary to build more submarines to replace the Los Angeles-class ships as they age and can no longer be operated at high standards of safety and reliability. Initiating such a construction program from scratch will involve serious challenges. Nuclear submarines are among the most complex structures built by man. Not only must they survive and function underwater for long periods of time in a hostile environment, they contain a nuclear reactor in immediate proximity to the crew. Nonetheless, U.S. nuclear submarines have demonstrated their reliability in diverse conflict situations while maintaining an impressive safety record over the years. That history can be credited in large part to the highly skilled submarine design, engineering, construction, and management workforce—in the shipyards, at the factories of critical-component vendors, and in the public sector.

The most recently started submarine is now three years into construction. Shipyard workers and vendors of components needed only in the initial phase of construction are already dispersing or preparing to exit the business. More will leave as time goes on and the industry shuts down in phases. If more submarines are not started soon, then rebuilding the workforce, reopening the shipyard facilities, and reestablishing the vendor base could be very costly and time-consuming. Reconstitution could also compromise the reliability and safety of submarines constructed before today's high standards are reattained.

Motivated by these issues, the Office of the Secretary of Defense asked the National Defense Research Institute to compare the practicality and cost of postponing submarine production restart still further with those of resuming production as soon as feasible. The study, led by John L. Birkler, was performed over a six-month period in 1993. The research team drew on data from the Navy, the two submarine shipyards, and component suppliers. The researchers constructed and ran analytic models of least-cost submarine fleet replacement and of the costs and delays associated with postrestart workforce buildup. Their findings are as follows.

It is impractical to postpone submarine production restart much beyond the year 2000.

The first task was to determine how long further submarine production could be put off and compare that with how soon production could be restarted. If the Department of Defense desires to sustain a fleet of a certain size, production will have to restart at some point to replace ships that grow too old to be operated reliably.

To be more specific, production schedule options are limited by two factors. First, the Los Angeles-class ships will begin reaching the end of their normal service lives around 2006. By 2013, the attack submarine fleet will fall below the level thought to be the minimum consistent with future national security requirements. However, that does not imply an opportunity to postpone restart for many years, because of the second factor: Construction delays associated with assembling and reeducating a workforce will extend the time required to build a submarine from the current six years to about twelve. Thus, construction of the new attack submarine must start by about 2001. The earliest feasible restart date is 1996, the planned start date for a third ship of the Seawolf class—the last class designed to meet the former Soviet threat. The difference between the shortest production gap now feasible and the longest practical is thus only five years.

The longer the gap, the more difficult it will be to sustain a fleet adequate in size for the nation's projected needs. After 2006, the Los Angeles class will have to be decommissioned because of age at the rate of about four per year (if they have not been retired already to save money). It is unlikely that future procurement budgets will permit the production of submarines at the cold war rate of four per year. It will thus be necessary to start building in advance to keep the fleet from dropping below whatever target is desired.

These dynamics are illustrated in Figure 1, which shows the attack submarine fleet profile with no further production, that is, decommissioning only (gray curve), and new production at two ships per year (purple). The latter is intended to keep the fleet from falling below an illustrative force objective of 40.^[1] Fleet size falls because fewer submarines are being produced than are being decommissioned. If restart were delayed beyond the 1999 date shown, first delivery would not occur until after 2005 and the purple curve would fall below the force objective.

Because of the delay in restarting production, it will not be long before some options are foreclosed. For example, if the next submarine is not started until after 1999, a production rate of three per year (instead of the two per year shown in Figure 1) would be required to keep the fleet from falling below 40 ships; it would not be possible to sustain a fleet size of 50 even at three per year.

Greater flexibility in production scheduling could be realized if the more recently built Los Angeles-class submarines could be operated beyond the normal decommissioning age of 30 years. It would then be possible to sustain a greater fleet size at the same production rate or the same fleet size at a lower production rate than would be the case with the current decommissioning age.

It is not clear that an extended production gap would result in any net savings over the long term.

Postponing production saves money for two reasons. First, the present discounted value of the total fleet replacement cost drops as construction is pushed into the future.^[2] Second, if restart is postponed from 1996 into the late 1990s, a new submarine class, probably less expensive than the current Seawolf class, would be designed and ready for construction. These savings are offset to some degree by greater restart costs. The longer the gap, the more facilities must be shut down in a manner that will permit reopening, the longer they must be maintained, and the more must be spent to bring them back on line. Most important of all, the more it will cost to rebuild the workforce. Total reconstitution costs could approach $3 billion (see Figure 2).

For some combinations of desired fleet size and maximum production rate, a net cost savings may be realized by extending the production gap now under way (compare, for example, the minimum- and maximum-gap curves in Figure 3); for other force sizes and strategies, higher costs may result. In all cases, the cumulative projected gains or losses over the time it takes to replace the fleet (to 2030) are on the order of half a billion dollars or so—smaller than the errors that accompany our prediction methods over that time frame. Thus the cost outcome cannot be asserted with any confidence. However, it appears that, for some combinations of fleet size and production rate, gains on the order of a few billion dollars will accrue over the next 10 years if the gap is extended. Similar gains might be realized over the long run under either gap strategy if ship life could be extended beyond 30 years. However, the study could not account for all the costs potentially associated with such an initiative.

These marginal savings are realized at substantial risk.

In extending the production gap, the Department of Defense would run several risks that could add to currently quantifiable delays and costs. The industrial base may lose the expertise of individuals and the capabilities of firms that are essential for efficient reconstitution following a gap. It may be difficult for those design and production workers who do remain to integrate all the technologies becoming available in the interim into high-performance submarines. And environmental and nuclear regulatory impediments could add years to the time required to reconstitute.

There can be little tolerance for trial and error in nuclear-submarine design and construction. Losses of cumulative individual and institutional expertise could raise the risk of system malfunction and of an accident, possibly a nuclear one. Obviously, a nuclear accident would have grave consequences.

NDRI's recommendation is that the Department of Defense act to minimize the submarine production gap that is now under way.

Considering that it is unclear whether extending the current production gap will save money but clear that it will incur risks, the research team recommended that construction on the next submarines begin as soon as practicable. Specifically, the third Seawolf-class submarine should be started on schedule in 1996, and the next class of attack submarines should be started as soon as feasible after that, around 1998. Finally, considering that savings may be realized by extending the life span of many of the current class of submarines, the researchers recommended that the Navy carefully evaluate that option.

Notes

• [1] Forty ships is 10 percent below the minimum suggested in the Bottom-Up Review conducted by the Department of Defense. RAND assessed this small fleet in some detail because it was found that higher force objectives could not be sustained over a variety of production rates if restart is postponed beyond the mid-1990s.
• [2] Future costs that are nominally the same as earlier costs must be discounted for meaningful comparison—the earlier sum could be invested otherwise to realize additional earnings or benefits in the interim.