Options for Funding Aircraft Carriers

Options for Funding Aircraft Carriers

Options for Funding Aircraft Carriers

Options for Funding Aircraft Carriers

Excerpt

For over 40 years, Congress has funded the construction of U.S. Navy ships by appropriating enough money to pay for the entire construction project in the initial year of construction. This “fullfunding” practice was undertaken to ensure that Congress was aware of the total cost of a project before it was begun and that one Congress would not bequeath to subsequent ones a choice between further appropriations and midcourse cancellation.

The Navy begins construction of a new aircraft carrier every fourth or fifth year (on average), and the fully funded cost of a carrier can represent a quarter or more of the total Navy shipbuilding budget. Because federal revenues do not increase by the cost of a carrier every fourth or fifth year, appropriating money for a carrier usually means reducing appropriations for something else that year—for other shipbuilding efforts, other Navy programs, spending elsewhere in the Department of Defense (DoD), or outside DoD.

Other funding strategies than full funding might result in a smoother carrier–funding profile. The Navy's Program Executive Office for Carriers asked RAND to explore the implications of alternative funding strategies for carriers. During the early phase of the project, RAND researchers were concerned that carrier–funding spikes might result in costly disruptions in the scheduling of other shipyard work. However, it soon became apparent through interviews with knowledgeable persons that any disruptions and their costs were not likely to be extensive. Furthermore, we were able to show, through statistical analysis, that most of the carrier–funding spike was not “paid for” by reductions in the shipbuilding budget. We did not attempt to . . .

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