The Navy anticipates building its top priority—the Ohio replacement submarine—during a fiscally austere period where the shipbuilding account will be strapped for cash, but using a special, Defense Department-wide account would give the service new funding mechanisms that could save anywhere from 5 to 10 percent per ship, the Congressional Budget Office estimated.
Congress created the National Sea-Based Deterrence Fund in the 2015 defense authorization bill to help the service start to begin saving for its newest boomers before lead ship construction of the first Ohio-class replacement kicks off in 2021. In the 2016 National Defense Authorization Act, it added additional provisions that expand the Pentagon’s funding authorities when using the account, experts said.
For one, the NSBDF account allows for economic order authority, wherein the Navy can buy materials and components for the Ohio-class replacement and other nuclear powered ship classes such as the Ford-class aircraft carrier or Virginia-class attack submarine, Eric Labs, senior analyst for the Congressional Budget Office, told lawmakers at a House Armed Services Committee (HASC) seapower and projection forces subcommittee panel last week.
The NDAA also authorizes incremental funding and advance construction. Together, those authorities would net as much as 10 percent savings per ship, he added.
“If you’re talking about a $6 billion dollar submarine in round numbers, you’re looking at a $300 [million] to $600 million savings per boat,” Labs said.
Ronald O’Rourke, specialist in naval affairs for the Congressional Research Service, said that using the NSBDF would give the Navy flexibility to spend money in ways it wouldn’t be able to under normal acquisition regulations.
“That could achieve savings that would not be possible under multiyear procurement alone or under a similar provision that might be written into a block buy contract," he said.
