Estimating operating and support cost models for U.S. Naval ships

Abstract

With the end of the Cold War, the winds of military downsizing are blowing all over the world. Downsizing means fewer personnel, less facilities and smaller military budget. Therefore, understanding the relationships among factors responsible for force operating costs is extremely important when facing downsizing budgetary decisions. This study analyzes the U.S. Navy main combatant vessels' Operating and support costs. It seeks to reveal basic relationships of O and S costs through accounting and structural methods. The accounting oriented analysis found the VAMOSC-SHIPS and Jane's combined database to be relatively accurate with the exception of nuclear submarines and nuclear aircraft carriers. The structural analysis found that the overhaul cost should be analyzed separately due to essential differences used to calculate overhaul costs and a 1985 policy revision to ship overhaul. O and S cost relationships between factors other than overhauls were strong. Manpower was found to have the most dramatic effect on determining O and S costs