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Navy's options for surge sealift recap range from $22B to $38B through 2048


The Navy has assessed four potential options to recapitalize the surge sealift fleet through 2048 and estimates the costs will range between $22 billion and $38 billion, according to the service's business case analysis viewed by Inside Defense.


The January report, which the Navy sent to Congress in February, was mandated by lawmakers in the Fiscal Year 2019 National Defense Authorization Act. It lays out the costs for two parts of the service's three-pronged recapitalization strategy: acquiring used ships from the commercial market and building new vessels in U.S. shipyards. The strategy's third part, service life extensions, is "ongoing," according to the report.


"Based upon the combination of cost and the ability to deliver U.S. purpose-built ships for key capability, the acquisition of U.S. purpose-built ships and used commercial vessels, as reflected in the [March 2018 recapitalization plan], remains the best approach to recapitalizing strategic sealift requirements through 2048," the report states.


References to new purpose-built ships made in the U.S. refer to the Common Hull Auxiliary Multimission Platform, dubbed CHAMP, which the report estimates could cost up to $1.14 billion per vessel. All dollar figures in the report are 2018 constant-year dollars. The CHAMP program is expected to produce between one and three hull forms that can accommodate five auxiliary ship mission sets.


"The purchase price for new U.S. purpose-built ships is based on escalated cost, using standard inflation of two percent per year, of the Bob Hope- and Watson-class [large medium speed roll-on/roll-off] vessels," the report states.


Other categories of ships factored into the analysis are used U.S.-built ships as well as used foreign-built ships participating and not participating in the Maritime Security Program. MSP is a Transportation Department effort that pays stipends to "militarily useful" vessels active in international trade to be available to serve Defense Department sealift requirements if needed.


The service also included a category for U.S.-built ships using a foreign design but did not include costs or vessel quantities for that option in any of the potential plans. In a related appendix, the report states neither a request for information from the Maritime Administration nor a Military Sealift Command market survey "received responses that reflected foreign-designed, U.S.-built vessels." Those agencies as well as U.S. Transportation Command have been working with the Navy to develop recapitalization plans.


Navy Secretary Richard Spencer sent Congress early last year a broad overview of the service's plans to recapitalize the surge sealift fleet, which was expected to cost $242 million throughout the future years defense program. The business case analysis does not break down the immediate costs of each plan.


The need to recapitalize was made clear by TRANSCOM chief Army Gen. Steve Lyons earlier this year in his written testimony to Congress.

"Due to the increased age of the sealift fleet, degraded fleet readiness, and wartime requirements, sealift is USTRANSCOM's No. 1 readiness concern," Lyons told lawmakers in March.

The surge sealift fleet, comprised of various roll-on/roll-off vessels operated and maintained by multiple government agencies and civilian mariners, is tasked with transporting Army and Marine Corps ground equipment in times of surge deployment.


Each of the Navy's four options would recapitalize 9.8 million square feet of sealift capacity, replacing the Bob Hope and Watson classes of large medium speed roll-on/roll-off ships. The Defense Department's recently revalidated sealift requirement is 15.3 million square feet.

Navy's 2018 strategy presents lowest costs


The least expensive option the Navy offered lawmakers follows through on Spencer's March 2018 report titled "Sealift that the Nation Needs" (SNN) with a price tag of $22.3 billion through 2048.


Marked as option C, the service would procure 26 foreign-built vessels participating in the Maritime Security Program for an estimated cost of $70 million per vessel, and a total cost of $1.8 billion.


The service would also procure 18 CHAMP vessels for $20.5 billion.


A different route, labeled option D, changes the service's 2018 plans in favor of used U.S.-built vessels discovered through Military Sealift Command's June 2018 market survey.


That option estimates 14 used U.S.-built ships would cost $245 million per vessel for a total cost of $3.4 billion. Additionally, 12 used foreign-built MSP ships would incur an $840 million bill. The costs for 18 CHAMP vessels would remain $20.5 billion.


Overall, option D would cost $24.7 billion through 2048.

The document's conclusions seem to express support for the strategy developed in the SNN report, but it is not clear from the document whether the Navy prefers option C or D. A Navy spokesman confirmed to Inside Defense today the service supports option C.


The other two options are both significantly more expensive and rely solely on used U.S.-built vessels and new ship construction.


If the service tried to recapitalize the surge sealift fleet with 33 CHAMP vessels, the total cost would be $37.6 billion, according to the document.

Alternatively, the Navy could procure 14 used U.S.-built vessels for $245 million per ship with a total price tag of $3.4 billion. In that plan, the service would buy 25 CHAMP vessels for $28.5B with a total cost of $31.9 billion.


Additional costs for 'modernizations'

The Navy's report states several assumptions its analysis makes.


"The term 'modernization' applies to a wide array of potential ship alterations, executed in the U.S. shipyards, for the purpose of ensuring readiness and/or extending service life," the report states.


The three categories of used ships each have an estimated modernization cost and time period based on the Maritime Administration's historical data. Used U.S.-built ships are projected to take up to one year to modernize for $45 million.


Foreign vessels in the MSP would likely require up to six months and cost $18 million to modernize. Foreign vessels that are not participating in MSP would require up to eight months to modify and would incur a $47 million bill per vessel.


The service also assumes the U.S. shipbuilding industry has "sufficient capacity" to build the required number of ships through 2048 to maintain the sealift requirement. The lift capacity for "non-purpose built, used vessels" will be 170,000 square feet, while new construction vessels will have 300,000 square feet of capacity per ship, according to Navy assumptions.

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