Rebuttal of the criticism of Romney’s shipbuilding plan

On Monday, October 8th, Mitt Romney announced a pledge to significantly increase the pace of shipbuilding, from 9 to 15 ships per year, and of submarine construction to 3 subs per year. His naval affairs advisor, former SECNAV John Lehman, also pledged to build up the amphibious ship fleet to 39 vessels (i.e. to the USMC’s stated requirement), build a new frigate class to replace the FFG-7 class, build dedicated missile defense ships on the DDG-1000 or LPD-17 platform, and continue the LCS and F-35 programs while continuing the production of the Super Bug after FY2014.

How would they pay for it? Inter alia, through “early stabilization of engineering requirements, cutbacks in unneeded staff, and greater reliance on competition to discipline pricing.”

Immediately after they announced their plans, Romney was attacked by misguided critics, one of whom was Dr. Loren Thompson of the Lexington Institute, who claims the US would need to borrow money from China to fulfill Romney’s naval buildup plans.

Dr Thompson is wrong. Here’s why.

Firstly, competition can really reduce costs significantly, especially if it’s held annually, rather than immediately prior to awarding a sole-source contract. That’s how the Navy was able to, for example, reduce the cost of a single LCS from $720 mn to $440 mn. During the Reagan years, competition for contracts from the same program was repeated annually, and significant savings were made as a result.

Secondly, there are still huge bureaucracies in the DOD led by too many too senior officers, although the savings resulting from cutting such bureaucracies may not be large.

Thirdly, a Romney Administration could pay for the naval buildup by making tough choices (i.e. cuts) elsewhere, specifically, in the ground force and in programs designed solely for COIN wars, which are coming to an end.

Even under Secretary Panetta’s proposals, the Army and the USMC will still be larger than they were on 9/11, with very large active duty components. They will have lots of equipment left over from the Afghan and Iraqi wars. On top of that, the Air Force will have far more Predator and Reaper drones than it needs.

Furthermore, Heritage Foundation’s James Jay Carafano has estimated that the DOD could save $32 bn per year in logistics costs by adopting a performance-based logistics model instead of the “how fast goods are delivered from Point A to Point B” model. And a recent study published in a defense industry journal found $40 bn in annual savings opportunities through more efficient acquisition. Although, to be fair, past efforts to make “efficiencies” did not deliver the large savings promised. It remains to be seen if the Gates-Panetta efficiencies deliver on their promises.

And Romney doesn’t have to cut the ground force deeply – he could simply shift brigade combat teams from the active to the reserve components.

So there’s an easy way to pay for Mitt Romney’s naval buildup plan even without significantly increasing the defense budget.


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