Economic Considerations for a New Gas Turbine System in the U.S. Navy

During the phases of a U.S. Navy acquisition program for any new system, such as a gas turbine system, various analyses are conducted to evaluate the economic and technical benefits that can be gained by the new system. It is important that the economic analyses provide a good estimation of the nonrecurring and recurring costs. For the development of a new gas turbine system, a test program to prove the system’s technical and operational capability will have to be conducted and a support system will have to be developed to operate and maintain it during its life cycle. The costs of the engine development, the test program, and the support system development are considered nonrecurring or investment costs. The operation and maintenance costs over the life of the system are the recurring costs. This paper presents the life cycle cost scenario that should be used to evaluate the economics of a U.S. Navy marine gas turbine and the considerations that should be included in a Return on Investment analysis of the engine. The major cost categories discussed include engineering, logistics support, program management, and deployment support. Also, the unique considerations that would apply to marine gas turbines for Naval use are discussed along with how these considerations affect the economics of a gas turbine acquisition program. In addition, the paper identifies the funding responsibility of each cost item and provides discussion on ways to reduce the investment cost.