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Since the Late 1990s, Expenditures per Ship Are Growing at an Increasing Rate

• This fact runs parallel to the legislative environment, which impact available resources. Annual shortfalls now amount to $8 billion between requested budget and legislatively authorized possible if legislation does not change.
• Pressure on maintenance budgets is expected to grow as the effects of sequestration are felt, with no expected diminishment in the demand for naval forces.
• Even absent sequestration, continued growth in per-ship maintenance cost is likely unsustainable, at least at the rate seen in the last 15 years. At the rate seen, maintenance would either become a larger component of the operations and management budget or come at the expense of new construction or modernization or require deferral.

A Study of the DDG-51 Class Shows the Mismatch Between Navy's Claims for Maintenance and What Is Spent

• A comparison between the cumulative maintenance levels for the DDG-51 and the levels specified in the Navy's technical foundation papers showed that the Navy is not in general funding to the level as stated in the technical foundation papers.
• This casts doubt on the validity of the technical foundation papers' requirements and the Navy's commitment to carrying out the maintenance stated in these published papers.
• Given this, the Navy will need to consider alternatives to the technical foundation papers' process as it formulates requirements and source plans.

Deferred Maintenance of Ships Affected by Individual History of Ships

• Ships of similar age and operating histories whose major difference is basing histories — with the attendant effects on maintenance — can show dramatic differences between the overall costs to maintain.
• Maintenance deferrals exact an extremely high premium that drives ship cost up in ways inconsistent with the need to contain costs.
• Any maintenance construct needs to understand and budget for the high cost of deferral or devise mitigations for cases where deferral is inevitable.