US Navy asks to slow building of two carriers

By Bill Bartel
The Virginian-Pilot
© March 20, 2012

http://hamptonroads.com/2012/03/navy-asks-slow-building-two-carriers

Driven by pressures to cut spending in its 2013 budget, the Navy wants to take two extra years to build the aircraft carrier John F. Kennedy, which is to be constructed at Newport News Shipbuilding.

The proposal, part of the Navy's budget request, would reduce construction costs of the JFK by more than $2.5 billion over the next two years by delaying some payouts.

The slowdown won't change shipyard employment. But the proposal raises concerns that lengthening the construction time could increase the total cost of the ship and could hurt the Newport News yard's efforts to make the most efficient use of its skilled workers and supply chain.

The JFK, the second Ford-class carrier, has until recently been expected to be delivered in September 2020 at a price tag of $11.4 billion. The Navy's proposed budget being considered by Congress would change that date to September 2022.

The Navy also is proposing to extend the delivery date for the third Ford-class carrier, which has not been named. That vessel would be delivered in 2027 instead of 2025.

The delayed deliveries are connected to the timetable for paying for carrier construction. The Navy is allowed to take up to five years for the payments but is asking Congress for six years. (The Navy also pays billions in advance costs before construction.)

For the JFK, the Navy's earlier plans called for allocating $1.94 billion in 2013 and $1.92 billion the following year, according to Congressional Research Service reports.

The Department of Defense budget proposal announced in February would reduce the 2013 funding by about two-thirds, to $608 million, and cut the 2014 allocation to $666 million. Much of the JFK's cost would be paid in the four years to follow, including almost $3 billion in 2015, the Congressional Research Service reports state.

Three Hampton Roads congressmen who serve on the House Armed Services Committee said they're wary of the construction delay request, particularly because it shifts most of the payments during construction to later budget years that are less predictable.

"Nobody knows where they're getting the dollars," said U.S. Rep. Randy Forbes, R-Chesapeake, noting that the proposed Pentagon budget calls for $487 billion in defense spending cuts over 10 years.

Those defense cuts will rise to more than $1 trillion over 10 years starting in 2013 unless Congress intercedes this year. Legislation approved last year calls for the deeper mandatory cuts in defense after legislative leaders failed to reach agreement on trimming deficit spending.

Spreading out construction could make the ship more expensive, the congressmen said.

"If the JFK comes in at a higher cost because we've moved it to the right, then Congress has nobody to blame but themselves," said U.S. Rep. Rob Wittman, R-Westmoreland County.

Capt. Cate Mueller, a Navy spokeswoman, said the cost of the carrier will increase because of inflation but will not exceed spending caps imposed by Congress.

Extending the delivery date "provides a better fit with the Navy's shipbuilding plan," Mueller said, so that the JFK's arrival more closely matches the replacement of the 37-year-old carrier Nimitz.

Newport News Shipbuilding executives have indicated they prefer a five-year funding cycle for carrier construction but aren't getting in a public debate on the issue.

"This is a long and complex process, and the budget isn't complete," company spokeswoman Christie Miller said. "We've communicated to the Navy and Congress the most efficient way to build carriers is on five-year centers, which is the program of record. We hope the program of record stands. It would be too speculative to comment beyond that at this point."

Even with the slowdown, the Newport News shipyard is expected to have steady work for its 21,400 employees. In addition to building new carriers, the shipyard is overhauling the Theodore Roosevelt, has just signed a contract to overhaul the Abraham Lincoln and later this year will begin deactivating the 50-year-old Enterprise when it's decommissioned.

The shipyard also works with Electric Boat in Groton, Conn., to build Virginia-class submarines.

Pentagon officials have said they are committed to maintaining a fleet of at least 11 carriers even as older ships are phased out. The exception will be a three-year period beginning this fall when the carrier fleet drops to 10 after the Enterprise is decommissioned. Its replacement, Gerald R. Ford, is scheduled to be delivered in September 2015.

Wittman, who leads the House Armed Services subcommittee on oversight and investigations, said he is particularly wary of the construction slowdown because Washington has been pushing the shipyards "to make sure they're the most efficient possible."

Rep. Scott Rigell, R-Virginia Beach, said, "I'm not convinced that the expansion of the construction time really works in the best interest of our national defense."

Forbes warned that shipyard subcontractors might have to cut employees if there's less work for the specialized carrier projects.

"I feel that the big yard can deal with it," Forbes said. "The most significant impact is on the supply chain and the vendors that deal with them."