DEFENSE INDUSTRY

House support could mean good news for EB

BLOOMBERG FILE PHOTO
A HOUSE DEFENSE panel moved to restore funding for a second Virginia-class submarine the Navy struck from fiscal 2014 plans as part of Pentagon budget- cutting.
Posted 4/26/12

WASHINGTON - A House defense panel moved to restore funding for a second Virginia-class submarine the Navy struck from fiscal 2014 plans as part of Pentagon budget-cutting, which could mean good news for Electric Boat.

The House Armed Services Committee’s seapower panel recommends adding a down payment, or “advance procurement,” in the fiscal 2013 budget, according to documents released today.

It also proposes giving the Navy authority to “incrementally” fund the nuclear-powered submarine in fiscal 2014 and beyond.

The panel’s recommendations will be considered by the full committee next week as it shapes its fiscal 2013 defense authorization bill.

The Republican-led Armed Services Committee will be the first to act on the budget blueprint President Barack Obama and the Pentagon proposed in February to cut $487 billion from previously planned defense spending over 10 years.

The submarine proposal indicates lawmakers won’t hesitate to refashion a spending proposal that Defense Secretary Leon Panetta has said should be passed as a package without modifications that risk reversing the proposed savings.

The Navy had planned to buy two Virginia-class submarines a year, with the work split between Huntington Ingalls Industries Inc. of Newport News, Virginia, and General Dynamics Corp.’s Groton, Connecticut-based Electric Boat unit.

Instead, the Pentagon now proposes buying one boat in fiscal 2014, while delaying another until fiscal 2018.

‘Peerless’ Submarine

The House panel recommended a multiyear contract to buy as many as 10 Virginia-class submarines, up from the nine the Navy proposed.

The Pentagon has said the Navy could save $4.4 billion, or 14 percent, on a multiyear contract for nine of the vessels.

Representative James R. Langevin, a Democrat from Rhode Island, said the panel’s proposal “marks a major development toward maintaining the current two-boat-per-year production level of the peerless Virginia-class submarines, which are critical to a national security strategy increasingly focused on the Asia- Pacific region.”

Electric Boat builds the submarines at the company’s Quonset Point and Groton, Conn., facilities.

“Slowing down production would put these benefits at risk and is estimated to actually increase the cost of production for taxpayers by $600 million,” Langevin said today in an e-mailed statement.

The Navy would receive more than $700 million in funding for advance procurement of material in fiscal 2013 under the House panel’s plan, according to Langevin.

A 10-vessel block purchase would create “further efficiencies and creating more certainty for the submarine industrial base,” Langevin said.

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