The Cost of a Warship and Some Thoughts on FFG(X) (2018)
As the US Navy's FFG(X) program heats up, I've been digging through the Navy's FY19 budget submission to get an idea of various costs trade offs involved in designing a modern "medium end" warship. While none of the information that I have found is particularly revolutionary, I thought I would post my conclusions were still worth posting.
Grouping those top ten items by category produces an even clearer picture of what is driving costs - sensors, communications, and the computers need to make use of them. Thus, while cost management on low end ships is a matter of controlling their physical size, cost management on high end ships is an issue of controlling the complexity of the C4ISR systems. An example of this is how a British Daring-class destroyer with its advanced combat systems cost almost as much as an Arleigh Burke despite being smaller and having half the armament.
Today, the Navy only has two active production lines for surface combatants - the DDG-51 Flight III Arleigh Burke and the LCS Flight II Freedom / Independence. However, since these two designs are on opposite ends of the spectrum (one widely acknowledged as the most capable warship in the world and the other routinely criticized for its lack of capability), comparing them directly is remarkably valuable.
A DDG-51 Flight III has an official Gross Unit Cost of $1,747 million while an LCS Flight II is $565 million (all figures in this post are an average of the 7 DDG or 6 LCS in FY17-19). However, the actual amount spent per ship is noticeably higher: $1,892 million for a DDG-51 and $676 million for an LCS. Further, even those figures do not tell the full picture as various items are procured separately - most noticeably the engines and generators, which run around $25 million per ship for both classes. However, perfectly accounting for the total costs of these ships is not our aim so we can largely ignore the complexities of Federal accounting.
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| The official Gross Unit Cost breakdown between DDG-51 and LCS |
In the above chart we can see both the relative costs of a DDG-51 and an LCS, as well as breakdowns of the costs of the individual ships. The most interesting thing here is that Basic Construction accounts for 51% of the cost of a DDG-51 but 79% of the cost of an LCS. This implies that as a ship becomes more capable, the cost driver shifts from the hull to the combat systems. Further, a closer look Basic Construction will reveal that is does not increase linearly with the ship's size. The 9650 ton DDG-51 has a Basic Construction cost of $92,000 per ton while the 2960 ton LCS (average between the two variants) costs $151,000 per ton - some 64% more despite its less robust construction.
Taken together, these points imply that adding a ton to a smaller less capable ship will increase the cost far more in both absolute and relative terms than adding a ton to a larger more capable ship. Thus, high end ships can be more cheaply designed with margins for future growth while low end ships will be under pressure to be made as compact as possible. This naturally leads to high end ships lasting far longer in service as they can be upgraded as technology changes - a point that can be seen in my recent post about USS Long Beach.
But if size mostly drives the cost of a low end ship, what exactly drives the cost of a high end ship? Despite the large portion labeled "Ordnance" in the Navy's breakdown above, actual kinetic weapons account for very little of the cost of a DDG-51. Altogether the guns, torpedo tubes, and missile launchers compose barely more than 5% of the ship's cost. Here are the top ten single most expensive pieces of equipment on a Flight III Arleigh Burke:
$170.2m - AN/SPY-6 Air and Missile Defense Radar
$131.4m - Aegis Weapon System Mk 7
$52.4m - Mk 41 Vertical Launch System
$50.4m - Exterior Communication Systems
$41.0m - SQQ-89 Undersea Warfare Combat System
$37.4m - Main Reduction Gears
$26.5m - Mk 45 Lightweight Gun System
$17.0m - Ship's Signals Exploitation Equipment / Spectral
$15.7m - SLQ-32(V)6 SEWIP Electronic Warfare Suite
$14.2m - USQ-82(V) Gigabit Ethernet Data Multiplex System
Altogether these ten items total $556 million or 31% of the ship's cost. In fact, the top two alone (Aegis and AMDR) represent 17% of its cost. In the figure below, we can see the total cost of these top ten items grouped by type and compared to the overall cost of the ship.
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| Relative cost of the 10 most expensive items on a Flight III Arleigh Burke |
Grouping those top ten items by category produces an even clearer picture of what is driving costs - sensors, communications, and the computers need to make use of them. Thus, while cost management on low end ships is a matter of controlling their physical size, cost management on high end ships is an issue of controlling the complexity of the C4ISR systems. An example of this is how a British Daring-class destroyer with its advanced combat systems cost almost as much as an Arleigh Burke despite being smaller and having half the armament.
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| Top ten items on a Flight III Arleigh Burke grouped by type |
So what do these figures mean for the Navy's FFG(X) program? Given the advanced air warfare system specified (EASR and SM-6), I believe that it would be foolish to attempt to limit costs by choosing a smaller hull with fewer weapons. Instead a large hull should be selected and it should be given a considerable armament (32-64 VLS cells). While this would increase the unit cost to some degree, this increase would be fairly negligible compared to the cost already incurred by the choice of combat system. In exchange, the Navy would get a far more capable vessel that is far less likely to be retired early.
