Congratulations are in order for Saab Kockums. Just yesterday, the company received a contract from the Swedish Defense Materiel Administration (FMV) to build two new Type A26 submarines, and to upgrade two of the Royal Swedish Navy’s three Gotland-class submarines. The Gotlands should be ready between 2018 and 2019, and the A26s between 2022 and 2024. The press release conflates the cost of the two rather different activities, but it’s clear that the cost of designing and building the two new boats will be somewhat less than SEK 8.7 billion. At today’s exchange rate, that’s about $500 million per submarine. That might sound like a lot of money. By American standards though, it’s such a bargain, it’s almost scandalous.
Consider that the US Navy this year proposes to buy two more SSN-774 Virginia-class submarines for $2.69 billion each. (Ronald O’Rourke’s report this month from the Congressional Research Service lays out the numbers very well.) Virginias require crews of 136. Saab tells me that depending on the mission, the A26s will carry crews of 25 to 35. The A26s will have far lesser environmental end-of-life disposal problems than the nuclear-powered boats, though they will require combustible fuels to run their diesel and stirling engines.
All this means that acquiring a Virginia requires about five times the purchase price, and four times the crew, as acquiring an A26. If the in-service costs are broadly proportional to the procurement costs (a generally reasonable estimate), then the US Navy could buy at least four A26s for every -774.
How is Kockums doing this? The first reason for the difference in price is automation. Almost like an underwater fighter plane, a Swedish submarine is effectively “flown” by a single helmsman. On an American submarine, there’s a whole team of people devoted to navigation and conning. There are similar human redundancies elsewhere on the ship. Multiply that by the need for several watch sections, and the berthing, messing, and environmental support for all those people inside the pressure hull leads to a much larger submarine—ultimately 7,900 tons for a Virginia, compared to 1,900 tons for an A26.
Next is that nuclear thing. The reactor alone on a Virginia costs more than the projected cost of an entire A26. Not the engines—the whole submarine.
Third is focus in manufacturing. The A26s, like the Gotlands before them, will be built entirely at Kockums’ yard in Malmo, Sweden. Virginias are built jointly by the Electric Boat Division of General Dynamics in Groton, Connecticut and Quonset Point, Rhode Island, and by Newport News Shipbuilding in Virginia, one of the two big yards in Huntington Ingalls Industries. As O’Rourke puts it, “the arrangement results in a roughly 50-50 division of Virginia-class profits between the two,” and keeps two companies in the business of both installing nuclear reactors and building whole submarines. There’s a modicum of competition between the two companies, as the Navy can vary future work shares slightly, but there’s no real threat of losing the business.
Admittedly, required range also drives cost. In Canberra, two governments over the past seven years have been contemplating what sort of submarine should replace the Royal Australian Navy’s six Swedish-designed but Australian-built Collins-class boats. It’s not worth recounting here how the construction and operation of that flotilla has been troubled, but the differing needs are illustrative. To suit Australia’s geo-strategic situation between the Pacific and Indian Oceans, the RAN will need a long-range, ocean-going, deepwater boat with a towed array and cruise missiles. That further means a stronger hull, a bigger weapons room, and much larger fuel tanks. Each of these elements necessarily adds cost.
The A26s will be the opposite of all that, suited for the cold, shallow water of the Baltic, and armed with only torpedoes and swim-out commandos. It's not yet clear that Saab would be the efficient developer of the next big Australian boat—though Saab is working hard to stay in the running. Meanwhile, the Abbot Government has had extensive discussions with the Abe Government in Tokyo over possibly buying Soryu-class submarines from Mitsubishi Heavy Industries or Kawasaki Shipbuilding. Unlike the American approach, the two Japanese shipyards are each building whole submarines. Like the A26s, the Soryus have Swedish-designed stirling engines. A Soryu is much bigger than an A26, but its development costs are now basically sunk. Thus Australia could get a great deal, for according to the Japanese Defense Ministry’s 2015 budget, the 11th ship of the class will cost ¥64.3 billion—about $520 million US.
In contrast, the deal that the US is getting is pretty raw.
In shot, news of Swedish and Japanese submarine programs throws a harsh light on the prices the US Navy pays. This nuclear-versus-diesel question has been around for decades, but the relatively recent development of air-independent propulsion options like the stirling engine has shifted the debate. A nuclear-powered submarine still has some tactical advantages over a diesel- and stirling-powered one. A nuclear-powered boat has far greater range. But it’s a weird analysis that will claim four times the advantage, and a weirder one yet that will assert that a mixed fleet is somehow impossible. Somewhere in the world, there must be an operating environment in which conventional boats would be more cost-effective. So why does the US Navy persist in overpaying? Because as the nuclear propulsion mafia in the submarine community know, buying a single conventional boat will openly advertise just how lopsided the cost comparison really is. And at that point, more legislators than just John Sidney McCain will start railing about the program. For why buy a single submarine when you could get a whole wolfpack?