The 2024 Sea-Air-Space defense conference hosted by the Navy League from April 8-10 had a more somber tone than anticipated as U.S. Navy leadership and major defense contractor executives gathered at the Gaylord National Resort and Convention Center, just eight miles south of the U.S. Capitol. This gathering was overshadowed by a damning internal report directed by Secretary of the Navy Carlos Del Toro, which uncovered significant delays across the Navy’s shipbuilding portfolio.
Just before the Sea-Air-Space conference began, Nickolas Guertin, the Navy’s acquisition chief, admitted to reporters at the Pentagon, “We don’t have detailed plans of action, milestones, initiatives – we are identifying and deeply looking into where we are now in a ‘get real, get better’ approach.”
The urgency of these revelations is critical as the U.S. defense budget nears $1 trillion annually, emphasizing the need for enhanced shipbuilding and maintenance capacity to meet growing demand. Admiral Phil Davidson’s warning of potential Chinese aggression towards Taiwan by 2027, now referred to as the “Davidson Window,” highlights the strategic vulnerabilities that these delays could worsen.
Recent assessments have shown significant delays in major programs, including the Columbia-class submarine, the Virginia-class submarine, the USS Enterprise aircraft carrier, and the Constellation-class frigate, with projected delays of up to three years. The delay in the Columbia-class submarines, vital to U.S. nuclear deterrence, to 2028 could destabilize the strategic balance in the Pacific.
The planning fallacy, identified by Nobel Laureate Daniel Kahneman, is the underlying cause of these setbacks. This cognitive bias leads decision-makers to underestimate risks and overestimate benefits, impacting national security. The U.S. Navy should adopt an “outside view” approach, utilizing reference class forecasting to align expectations with the complexities of new shipbuilding programs.
Reference class forecasting has been successful in Europe, notably in the United Kingdom, where the Treasury’s Green Book provides guidelines for evaluating policies, programs, and projects to mitigate optimism bias. As tensions rise between China and Taiwan, an empirically grounded framework is essential for the reliable and timely construction of ships and systems.
By embracing Kahneman’s approach and implementing bold strategies, the U.S. Navy can realign its shipbuilding programs and make informed investments, strengthening its position in the Indo-Pacific region in the process.