The cost of the US Navy’s T-AGOS 25-class ocean surveillance ships has soared as a result of rising shipbuilding costs, including direct material inflation, supply chain challenges, and increased non-recurring engineering costs, according to a March 2023 report produced by the Congressional Research Service (CRS).
The report by CRS analyst Ron O’Rourke said the US Navy procured the first of a planned class of seven new T-AGOS 25-class ocean surveillance ships at a cost of US$434.4 million in FY2022.
However, the US Navy’s FY2024 budget submission shows that the ship’s estimated procurement cost has since grown to US$789.6 million – an increase of US$355.2 million, or 81.8%. The US Navy’s proposed FY2024 budget requests US$355.2 million in additional cost-to-complete procurement funding to pay for this cost growth.
The US Navy wants to procure the second T-AGOS 25-class ship in FY2025 and wants to procure a total of seven T-AGOS 25-class ships as replacements for its five existing T-AGOS vessels. It wants to procure the second through fifth ships in the class in FY2025-FY2028 at a rate of one ship per year and wants to use a single shipbuilder to build all seven T-AGOS 25s. A competitive award of a firm fixed-price contract for the detailed design and construction of the lead ship, with options for building up to six additional ships, is expected in January 2024.
O’Rourke said that among the issues for Congress to address in the T-AGOS 25 programme are the likelihood of further cost growth relating to the first ship in the class; and the accuracy of the US Navy’s estimated procurement costs for the second and subsequent ships in the class, particularly given the cost growth on the lead ship in the class.
O’Rourke said the US Navy’s desire to replace the five in-service T-AGOS ships with seven larger and faster T-AGOS 25s can be viewed as a response by the Navy to the submarine modernisation efforts of countries such as China and Russia.