CBO Report on Acquisition Costs of the Navy’s Medium Landing Ship

April 11, 2024 7:57 PM

The following is the Congressional Budget Office’s April 11, 2024 report, Acquisition Costs of the Navy’s Medium Landing Ship.

From the report

In fiscal year 2025, the Department of the Navy plans to start construction of the medium landing ship (LSM), a new small amphibious ship.

Amphibious warfare ships transport and deploy Marine Corps units in a range of small to large operations. Previously called the light amphibious warship (LAW), the new ship is expected to transport and deploy Marine littoral regiments—small Marine Corps units armed with antiship or antiair missiles—in and around a theater of operations, particularly the western Pacific.

Many facets of the program remain uncertain, such as the number of ships the Navy wants to buy as well as the design and capabilities of the ship. Senior Navy and Marine Corps leaders have called for between 18 and 35 ships. Equally uncertain is the overall cost of the program, because the Navy’s estimates have varied widely in its last three shipbuilding plans and budget submissions.

In this report, the Congressional Budget Office examines the potential acquisition costs of the program.

By CBO’s estimates, an 18-ship LSM program would cost between $6.2 billion and $7.8 billion in 2024 (inflation-adjusted) dollars, or $340 million to $430 million per ship. The ranges in those estimates reflect the range of full-load displacements—4,500 tons to 5,400 tons—in preliminary designs that shipbuilders submitted to the Navy. (Full-load displacement measures the weight of the water a ship displaces when carrying its crew, stores, cargo, ammunition, fuel, and other liquids.)

CBO’s estimates, which are derived from a CBO model that uses a ship’s weight to calculate its costs, range from two to roughly three times the Navy’s estimates for the 8 ships the service wants to buy between 2025 and 2029. On the basis of the Navy’s estimated cost per ship—roughly $150 million—an 18-ship LSM program would probably cost $2.6 billion in 2024 dollars.

CBO estimates the cost of a 35-ship LSM program at between $11.9 billion and $15.0 billion in 2024 dollars, depending on the final size of the ship. The estimated cost per ship is the same as that for an 18-ship program. In a larger program, the cost-saving effects of learning would be almost equally offset by the real (inflation-adjusted) cost growth in the shipbuilding industry that would occur over the longer period it would take to purchase the additional ships.2

The agency’s estimates are based on a ship designed as a hybrid between an amphibious warfare ship and a ship built to commercial standards. Ships built to military standards have stronger hulls and internal compartments, more shock-hardened systems, and more safety features and equipment, among other things, than commercial ships. If the Navy changed the LSM’s design to make it equivalent to an amphibious warfare ship, then each LSM could cost between $475 million and $600 million, adding between $2 billion and $3 billion to the costs of an 18-ship program and between $5 billion and $6 billion to the costs of a 35-ship program. Conversely, if the LSMs were designed to more commercial standards, then the costs could be much less—from $110 million to $140 million per ship, reducing costs by $4 billion to $8 billion for an 18-ship program and by $5 billion to $10 billion for a 35-ship program.

Download the report here.

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