A U.S. Senate panel approved the Navy’s
plan to sign a five-year contract with General Dynamics Corp. and
Northrop Grumman Corp. for new Virginia-class attack submarines.
The Senate defense appropriations panel cut two submarines
from the Navy request for seven, citing projected cost overruns of
up to 34 percent in the $81 billion program, the military’s second
most costly after the Joint Strike Fighter.
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The full appropriations committee — and then the full Senate
— are expected to approve the panel’s action as part of a $369.2
billion fiscal 2004 defense spending bill. The House
appropriations committee rejected a five-year contract, saying the
cost growth in Navy shipbuilding argues against committing funds
for more than one year. The two chambers probably will have to
work out that difference in a special conference.
The issue is “substantial,” said Senator Ted Stevens, an
Alaska Republican who chairs the appropriations committee. “There
are significant overruns in that program. We had no way to meet
that other than just deleting the last two ships. We have not
solved the problem, just postponed it.”
The Navy wants to buy one submarine in fiscal 2004 through 2006, then two in both 2007 and 2008. The Senate committee said
one each year was enough.
The Navy’s plan was approved by both the House and Senate
armed services committees that set defense policy and authorize
programs.
The Pentagon and contractors often press for long-term
contracts because they protect the programs, and the commitments
can produce savings from buying systems in quantity.
The Navy says a five-year contract would save $805 million.
The House committee said these promised savings “appear
insufficient given the size of the program.”
The White House Office of Management and Budget strongly
supports a seven-submarine contract.
“With this omission, significant savings over the life of
the submarine program will be foregone,” OMB said today in a
statement of policy on the overall House bill. “The
administration urges the House to provide this funding.”
The Virginia-class submarine is intended to be a low-cost replacement for the current Los Angeles class. It is designed to
fire Tomahawk cruise missiles, attack surface vessels and conduct
reconnaissance against land targets.
The vessel’s design is complete and the first submarine is
nearly 80 percent constructed and scheduled for deliver in June
2004.
The first four vessels are under construction at General
Dynamic’s Groton, Connecticut, facility and Northrop Grumman’s
yard in Newport News, Virginia.
Bloomberg News
