Magazine article National Defense

Budget Crunch Could Jeopardize New Carrier Procurement

Magazine article National Defense

Budget Crunch Could Jeopardize New Carrier Procurement

Article excerpt

With uncertain economic waters ahead, there may be a growing reticence within the Defense Department to commit to buying future aircraft carriers, its single largest procurement item.

With its newest carrier nearing structural completion and materials piling up for the second in the new Gerald R. Ford class of ships, analysts following the Navy's budgeting requests have observed a hesitance to begin paying for CVN-80, scheduled for procurement in fiscal year 2018.

Going into the fiscal year 2013 budget that is currently being mulled in Congress, there were discussions within the Pentagon and on Capitol Hill that CVN-79, the USS John E Kennedy, might be delayed to save money. But the shipbuilding industry breathed a sigh of relief when the Obarna administration's defense budget called for full funding to begin next fiscal year.

Now all eyes in the shipbuilding world are on CVN-80, which has not yet been named. As the only shipyard in the country that builds nuclear-powered carriers, Newport News Shipbuilding is dependent on future business from the Navy

"The laws of economics are unforgiving," shipyard President Mathew Mulherin testified to the House Armed Services Committee subcommittee on seapower in March. "Construction of aircraft carriers on four-year construction start centers will align the supplier base to plan production ... and [purchase] equipment and materials every four years. Changing to five or six-year centers interrupts the entire supply chain ... and may result in significant inefficiencies."

Each 1,000-foot-long behemoth takes at least five years to build. With a service life of 50 years, a meticulous schedule of materials purchasing, procurement and construction is necessary to maintain a functional fleet of 11 carriers, which is called for by law and in the Navy's 30-year shipbuilding plan.

Mulherin has said that in the current budget environment a full slate of Fordclass carriers, each procured on time and fully funded, could be a pipedream.

"I'm not confident of that," Mulherin said when asked last year if he expects the shipyard will build a full class of Ford carriers. "I'm not convinced we'll build them all. That's what keeps us up at night."

There currently is no plan to adjust carrier procurement schedules, though both construction time and multi-year funding periods for the Kennedy and CVN-80 have been lengthened. At the same time, advanced procurement periods for the two ships have been scaled back.

Traditionally, the Navy has used advanced procurement funding as an under-the-radar method of committing to buying a carrier. Once time for full funding rolls around, the Navy can point to several years of advanced funding--perhaps in the billions of dollars--as evidence that the ship should be bought.

For that reason, carrier acquisition has not been a major source of controversy since around 1988 when the Navy bought two Nimitz-class carriers, analysts said.

It has been suggested that the Navy could shave costs from the second and third Ford-class ships if it bought materials for both at the same time. It is a plan the Navy has used for carriers in the past and is currently using for destroyers, submarines and the Littoral Combat Ship. A dual- or block-buy procurement plan also gives industry peace of mind as they plan for the future.

Mulherin told HASC members that "absolutely I think there's huge opportunity to go and do that," when asked his opinion of a block buy strategy for CVN-79 and CVN-80. "You talk to the vendor base ... they would love to see it. It gives them the ability to go look at what investments they need, what work is out in front of them and be able to invest in training and tools to be able to support [a block buy]."

But Navy officials refused to consider a block buy with CVN-79 and CVN-80, saying that lessons from construction of CVN-78, the USS Gerald R. …

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