Order Code RS20643
Updated September 19, 2007
Navy Ford (CVN-78) Class (CVN-21) Aircraft
Carrier Program: Background and Issues for
Congress
Ronald O’Rourke
Specialist in National Defense
Foreign Affairs, Defense, and Trade Division
Summary
The Navy’s proposed FY2008 budget requests $2,724 million in procurement
funding for CVN-78, the first ship in the Gerald R. Ford (CVN-78) class of aircraft
carriers, also known as the CVN-21 class. The Navy’s proposed FY2008 budget also
requests $124 million in advance procurement funding for CVN-79, the second ship in
the class, and $233 million in research and development funding for the two ships. The
Navy’s estimated procurement costs for CVN-78 and CVN-79 are about $10.5 billion
and $9.2 billion, respectively. This report will be updated as events warrant.
Background
The Navy’s Current Carrier Force. The Navy’s current aircraft carrier force
includes one conventionally powered carrier, the Kitty Hawk (CV-63), and 10 nuclear-
powered carriers — the one-of-a-kind Enterprise (CVN-65) and 9 Nimitz-class ships
(CVN-68 through CVN-76). The most recently commissioned carrier, the Ronald Reagan
(CVN-76), was procured in FY1995 and entered service in July 2003 as the replacement
for the Constellation (CV-64). The next carrier, the George H. W. Bush (CVN-77), also
a Nimitz-class ship, was procured in FY2001 and is scheduled to enter service in 2008 as
the replacement for the Kitty Hawk.1
The Aircraft Carrier Construction Industrial Base. All U.S. aircraft carriers
procured since FY1958 have been built by Northrop Grumman Newport News
Shipbuilding (NGNN) of Newport News, VA — the only U.S. shipyard that can build
large-deck, nuclear-powered aircraft carriers. The aircraft carrier construction industrial
base also includes hundreds of subcontractors and suppliers in dozens of states.
1 Another conventionally powered carrier, the John F. Kennedy (CV-67), was retired on March
23, 2007; for a discussion, see CRS Report RL32731, Navy Aircraft Carriers: Retirement of USS
John F. Kennedy — Issues and Options for Congress, by Ronald O’Rourke.

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CVN-77. CVN-77, which was named the George H. W. Bush on December 9, 2002,
is to be the Navy’s tenth and final Nimitz-class carrier. Congress approved $4,053.7
million in FY2001 procurement funding to complete the ship’s then-estimated total
procurement cost of $4,974.9 million. Section 122 of the FY1998 defense authorization
act (H.R. 1119/P.L. 105-85 of November 18, 1997) limited the ship’s procurement cost
to $4.6 billion, plus adjustments for inflation and other factors. The Navy testified in
2006 that with these permitted adjustments, the cost cap stood at $5.357 billion. The
Navy also testified that CVN-77’s estimated construction cost had increased to $6.057
billion, or $700 million above the adjusted cost cap. Consequently, the Navy in 2006
requested that Congress increase the cost cap to $6.057 billion. Congress approved this
request: Section 123 of the FY2007 defense authorization act (H.R. 5122/P.L. 109-364
of October 17, 2006), increases the cost cap for CVN-77 to $6.057 billion.
Gerald R. Ford (CVN-78) Class (CVN-21) Program. The Navy’s successor
to the Nimitz-class aircraft carrier design is the Gerald R. Ford (CVN-78) class design,
also known as the CVN-21 design, which means nuclear-powered aircraft carrier for the
21st Century. Compared to the Nimitz-class design, the Ford-class design will incorporate
several improvements, including an ability to generate substantially more aircraft sorties
per day and features permitting the ship to be operated by several hundred fewer sailors
than a Nimitz-class ship, significantly reducing life-cycle operating and support costs.
Navy plans call for procuring at least three Ford-class carriers — CVN-78, CVN-79, and
CVN-80 in FY2008, FY2012, and FY2016, respectively. Table 1 shows funding for the
three ships through FY2013.
Table 1. Funding for CVN-78, CVN-79, and CVN-80, FY1997-FY2013
(millions of then-year dollars, rounded to nearest million; figures may not add due to rounding)
Total
97-
01
02
03
04
05
06
07
08
09
10
11
12
13
thru
00
FY13
Procurement (Shipbuilding and Conversion, Navy [SCN] account)
CVN-78
0
22 135 395 1163 623 619
736 2724 4072
0
0
0
0 10489
CVN-79
0
0
0
0
0
0
0
53
124
399 1620 465 3338 3192 9191
CVN-80
0
0
0
0
0
0
0
0
0
0
0
0
201
523
724
Subtotal
0
22 135 395 1163 623 619
789 2848 4471 1620 465 3539 3715 20404
Research and development (Research, Development, Test and Evaluation [RDTEN] account)
CVN-78
308 231 277 319
306 350 301
273
205
175
143 110
108
107 3213
CVN-79
0
0
5
0
0
0
0
35
28
39
40
31
19
17
214
CVN-80
0
0
0
0
0
0
0
0
0
0
0
42
48
48
138
Subtotal
308 231 277 319
306 350 301
308
233
214
183 183
175
172 3565
TOTAL
308 253 417 714 1469 973 920 1097 3081 4685 1803 648 3714 3887 23969
Source: U.S. Navy data provided to CRS March 28, 2007.
Gerald R. Ford (CVN-78). Section 1012 of the FY2007 defense authorization
act expressed the sense of the Congress that CVN-78 should be named for president
Gerald R. Ford. On January 16, 2007, the Navy announced that CVN-78 would be so

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named.2 CVN-78 and other carriers built to the same design will consequently be
referred to as Ford (CVN-78) class carriers.
The Navy wants to procure CVN-78 in FY2008 and have it enter service in FY2015
as the replacement for the Enterprise, which is scheduled to retire in 2013, at age 52. The
Navy estimates CVN-78’s total acquisition (i.e., research and development plus
procurement) cost at more than $13.7 billion. This figure includes about $3.2 billion in
research and development costs through FY2013, and a total of about $10.5 billion in
procurement costs. The procurement cost figure includes about $2.4 billion for detailed
design and nonrecurring engineering (DD/NRE) work for the CVN-78 class, and about
$8.1 billion for building CVN-78 itself. Including the DD/NRE costs for a ship class in
the procurement cost of the lead ship in the class is a traditional Navy ship procurement
budgeting practice.
The Navy’s proposed FY2008 budget requests $2,724 million in procurement
funding for CVN-78. As shown in Table 1, under the Navy’s proposed funding plan, the
ship is to be funded over a total of nine years, with about 35.2% of its procurement cost
provided in advance procurement funding between FY2001 and FY2007, about 26.1%
to be provided in the procurement year of FY2008, and about 38.8% to be provided in
FY2009. Dividing the main portion of the ship’s procurement cost between two years
(FY2008 and FY2009) is called split funding, which is a two-year form of incremental
funding. Section 121 of the FY2007 defense authorization act (H.R. 5122/P.L. 109-364
of September 29, 2006) authorizes the Navy to use four-year incremental funding for
CVN-79, CVN-79, and CVN-80.
CVN-79 and CVN-80. The Navy wants to procure CVN-79 in FY2012 and have
it enter service in 2019. As shown in Table 1, the Navy’s estimated procurement cost
for CVN-79 is about $9.2 billion in then-year dollars, and the Navy’s proposed FY2008
budget requests $124 million in advance procurement funding for the ship. The Navy
wants to procure CVN-80 in FY2016 and have it enter service around 2023. The Navy’s
estimated procurement cost for CVN-80 is about $10.7 billion in then-year dollars. As
shown in Table 1, the Navy plans to request an initial increment of $201 million in
advance procurement funding for the ship in FY2012.
Procurement Cost Cap. Section 122 of P.L. 109-364 establishes a procurement
cost cap for CVN-78 of $10.5 billion, plus adjustments for inflation and other factors,
and a procurement cost cap for subsequent Ford-class carriers of $8.1 billion each, plus
adjustments for inflation and other factors. The conference report on P.L. 109-364
(H.Rept. 109-702 of September 29, 2006) discusses Section 122 on pages 551-552.
Issues for Congress
Accuracy of Cost Estimate for CVN-78. Both the Congressional Budget
Office (CBO) and the Government Accountability Office (GAO) have questioned the
Navy’s cost estimate for CVN-78. CBO testified in July 2007 that it estimates that CVN-
2 For further discussion of Navy ship names, see CRS Report RS22478, Navy Ship Names:
Background For Congress, by Ronald O’Rourke.

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78 will cost about $1 billion more than the Navy estimates, and perhaps more than that.3
GAO testified in July 2007 that the CVN-78 “faces risks in the area of cost because the
estimate that underpins the budget is optimistic” and that “costs [for the ship] will likely
exceed budget if technologies or other materials are delivered late or labor hour
efficiencies are not realized.”4 Although the Navy publicly expresses confidence in its
cost estimate for CVN-78, CBO testified in July 2007 that the Navy has assigned a
confidence level of less than 50% to its estimate, meaning that the Navy believes there
is more than a 50% chance that the estimate will be exceeded.5
Technical Risk. GAO testified in July 2007 that the CVN-78 program faces
technical risks, particularly with regard to three new technologies that are to be
incorporated into the ship — the electromagnetic aircraft launch system (EMALS), which
is to replace the steam-powered catapults used on today’s aircraft carriers; the advanced
arresting gear, which is to replace the hydraulic arresting gear used on today’s aircraft
carriers; and the dual-band radar that is to be carried by both Ford-class carriers and the
Navy’s new DDG-1000 class destroyer. GAO testified that
the Navy may face challenges in maintaining its design schedule [for CVN-78]
because of delays in the development of the ship’s critical technologies. Such delays
could impede the completion of the ship’s design and interfere with the construction
of the ship.... The Navy has focused much attention on developing [CVN-78]
technologies and has retired much risk. Yet risk remains. The schedule for installing
CVN 78’s technologies takes advantage of construction efficiencies. The shipbuilder
has identified key dates when technologies need to be delivered to the yard in order
to meet its optimal construction schedule. A number of CVN 78’s technologies have
an increased potential to affect this schedule because they are (1) located low in the
ship and needed early in construction or (2) highly integrated or embedded in the
ship’s design.... While the Navy has mitigated the risk posed by some technologies,
like the nuclear propulsion and electric plant, key systems, in particular, EMALS, the
advanced arresting gear, and the dual band radar have encountered difficulties during
development that will likely prevent timely delivery to the shipyard.6
Cost Cap. The Navy interprets the procurement cost caps for the CVN-78
program that were established by Section 122 of the FY2007 defense authorization act
as being expressed in “FY2006 then-year dollars,” meaning the cost of the ship in then-
year dollars if the ship were procured in FY2006 rather than in FY2008 (for CVN-78)
or in FY2012 (for CVN-79). The Navy states that the estimated then-year-dollar costs
for CVN-78 and CVN-79 of about $10.5 billion and $9.2 billion, respectively, de-
3 Statement of J. Michael Gilmore, Assistant Director for National Security, and Eric J. Labs,
Senior Analyst, [on] The Navy’s 2008 Shipbuilding Plan and Key Ship Programs before the
Subcommittee on Seapower and Expeditionary Forces, Committee on Armed Services, U.S.
House of Representatives, July 24, 2007, pp. 12-13.
4 Government Accountability Office, Defense Acquisitions[:] Realistic Business Cases Needed
to Execute Navy Shipbuilding Programs, Statement of Paul L. Francis, Director, Acquisition and
Sourcing Management Team, Testimony Before the Subcommittee on Seapower and
Expeditionary Forces, Committee on Armed Services, House of Representatives, July 24, 2007
(GAO-07-943T), p. 15.
5 Statement of J. Michael Gilmore and Eric J. Labs, op cit, p. 13.
6 GAO-07-943T, op cit, pp. 13-14.

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escalate into FY2006 then-year dollar figures of about $10.0 billion and $7.4 billion,
respectively.
One potential question for Congress is whether the Navy is correct in interpreting
the cost cap figures in Section 122 as being expressed in “FY2006 then-year dollars.”
If the Navy is correct in this interpretation, then CVN-78 could experience about $500
million in cost growth for reasons outside those permitted in Section 122 without
exceeding its cost cap, and CVN-79 could experience about $700 million in cost growth
for reasons outside those permitted in Section 122 without exceeding its cost cap. Other
things held equal, this would reduce the chance that these ships will exceed their
respective cost caps. At the same time, however, the existence of a cost cap that is higher
than a ship’s currently estimated cost might not be viewed as conducive to rigorous cost
control on the ship, as it might encourage some to believe that cost increases up to the
cap would be acceptable.
Four-Year Incremental Funding. Although Section 121 of the FY2007 defense
authorization act granted the Navy the authority to use four-year incremental funding for
CVN-78 and CVN-79, the Navy, in its FY2008-FY2013 budget submission, did not use
this authority and continued to budget for the two ships using split funding (i.e., two-year
incremental funding). The Navy has the option of using the four-year authority when it
submits its FY2009-FY2013 budget plan next year. Using the authority for CVN-78
would permit a reduction in the amount of funding required for the ship in FY2009.
Other things held equal, that might permit additional things to be funded that year. It
would also, however, increase funding requirements for CVN-78 in FY2010 and
FY2011, which could make it more difficult at the margin to fund other things in those
years.
More generally, proponents of using four-year incremental funding for carriers
could argue that doing so would more fully mitigate the budget spikes associated with
procuring aircraft carriers, and consequently further reduce the need to disrupt other
programs by shifting them away from the year that the carrier is procured. Opponents
could argue that the budget spike associated with procuring a carrier is sufficiently
mitigated by two-year incremental funding, that shifting to four-year incremental funding
would result in an 11-year funding profile for a ship with a nominal seven-year shipyard
construction period, and that shifting to four-year incremental funding would encourage
advocates of other defense programs to seek the use of incremental funding for their
programs.
Block-Buy Contract. One possible option for Congress to consider for the CVN-
78 program would be to authorize the Navy to use a block-buy arrangement, particularly
if Congress decides that there is a high likelihood procuring CVN-79 and CVN-80.
Block-buy contracting was invented for the Virginia-class submarine program, where it
was used to contract for the first four boats in the program over the five-year period
FY1998-FY2002. One option for a block-buy arrangement would encompass CVN-78
and CVN-79. If that option is not used, another option would be a block-buy
arrangement encompassing CVN-79 and CVN-80. A block-buy arrangement in the
CVN-78 program could reduce the cost of the ships covered in the arrangement by a few
percent — perhaps enough to fund the procurement, for example, of an additional Navy
auxiliary ship or two additional Littoral Combat Ships (LCSs). The alternative strategy
of a multiyear procurement (MYP) would likely not be available for CVN-78 and CVN-

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79 because the Navy won’t be able to demonstrate design stability in the CVN-78
program — a requirement to qualify for MYP — until CVN-78 is delivered in FY2015,
which is three years after the planned procurement year for CVN-79.
Supporters of a block-buy contract could argue that the potential savings, though
fairly small in percentage terms, could be significant in absolute terms, in light of the
combined construction cost of the two ships. Opponents could argue that it would tie the
hands of future Congresses by creating a commitment to procure a ship that is not
scheduled for procurement until a future fiscal year.
Legislative Activity in 2007
FY2008 Defense Authorization Bill (H.R. 1585/S. 1547). The House
Armed Services Committee, in its report (H.Rept. 110-146 of May 11, 2007) on H.R.
1585 recommended approving the Navy’s FY2008 request for procurement and advance
procurement funding for CVN-78 program. The Senate Armed Services Committee,
in its report (S.Rept. 110-77 of June 5, 2007) on S. 1547, recommended reducing by $20
million the Navy’s FY2008 request for procurement funding for CVN-78 program and
approving the Navy’s FY2008 request for advance procurement funding for the program.
The report stated:
Within the budget for the CVN-78, the committee notes that the unit cost for the Ship
Self Defense System (SSDS) is 150 percent greater than the similar system procured
for the fiscal year 2007 amphibious assault ship, LHA(R). The committee has placed
significant emphasis on the importance of the Navy’s managing shipbuilding costs
in other sections of this report on costs from the shipbuilding prime contractors.
Given the high proportion of ship costs that accrue from sources other than the prime
contractors, the committee believes that it is equally important for the Navy to
manage the cost for Government-furnished equipment. The committee recommends
a reduction of $20.0 million in SCN for the SSDS for CVN-78. (Page 95)
FY2008 Defense Appropriations Bill (H.R. 3222). The House
Appropriations Committee, in its report (H.Rept. 110-279 of July 30, 2007) on H.R.
3222, recommended reducing by $20 million the Navy’s FY2008 request for
procurement funding for CVN-78 program and approving the Navy’s FY2008 request
for advance procurement funding for the program. The report stated:
The Ship Self Defense System (SSDS) suite of equipment that will be installed on
board the CVN-78 is a new capability system that is still under development. The
$99,546,000 estimated cost of the system is more than double the cost of the current
version of SSDS that is being installed on CVN-77 and also LHA-6. While the
Committee recognizes that an increased capability is bound to bear an increased cost,
it seems quite unreasonable that an incremental increase in capability will cost more
than twice that of the current system. Therefore, $79,546,000 is provided for the
CVN-78 SSDS, a decrease of $20,000,000. (Pages 228-229)
The Senate Appropriations Committee, in its report (S.Rept. 110-155 of
September 14, 2007) on H.R. 3222, recommended reducing by $20 million the Navy’s
FY2008 request for procurement funding for CVN-78 program and approving the Navy’s
FY2008 request for advance procurement funding for the program.
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