September 23, 2003

Conferees approve multi-year sub procurement
House and Senate conferees on the FY 2004 Defense Authorization Act have bitten the bullet and approved multi-year funding that commits Congress to funding one Virginia class nuclear sub a year for five years.

In August the Navy awarded General Dynamics Electric Boat Corp., in partnership with Northrop Grumman's Newport News Shipbuilding,a block-buy contract worth up to $8.7 billion for construction of six Virginia Class submarines. The contract provided that,upon Congressional authorization and appropriation, the Navy would award one submarine per year from 2003 through 2006 and two submarines in 2007.The contract also included a provision to transition to a multiyear contract in the event that Congress provided multiyear approval.

The multi-year deal now agreed by conferees actually falls a little short of the seven ship approval that the Navy and the builders had been seeking. Nonetheless, it represents quite a lobbying achievement. As recently as July, House appropriators declined to approve any multi-year deal at all, saying a future Congress should not be bound to support a program whose long-term costs had already soared by an estimated 24 percent. Senate appropriators, though, agreed to support a five-submarine deal that allows for some cost savings while continuing the practice of buying one vessel a year. That plan was endorsed by conferees.

In all, conferees proposed $11.5 billion, an increase of $2.4 billion over FY 2003 levels,for shipbuilding programs. This level fully funds amounts requested for fiscal year 2004 production ships, including one Virginia-class submarine, two Trident SSGN conversions, and three DDG-51 destroyers.

Besides the multi-year submarine deal, the conference agreement includes an additional two submarine refueling overhauls and $103 million for Cruiser modernization. It also includes the Navy’s request for construction of two T-AKE container ships.

Advance funding of $135 million over the request is provided to support procurement of an LPD-17 class amphibious ship in fiscal year 2005.

For future ship development, the conference recommends $1.5 billion, as requested, for the next-generation CVN-21 carrier; $168 million for the Littoral Combat Ship;$1 billion for the DD(X) program and $65 million for LHA(R).

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