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CT's Electric Boat and suppliers around the state depend on a military submarine contract. Its future is uncertain

Kaitlin McCallum, Hartford Courant on

Published in Business News

The push to continue the pace of building two Virginia-class submarines per year is in limbo as Congress works through defense authorization and funding bills that are currently at odds on procurement.

Connecticut lawmakers fear a reduction will have an outsized effect on suppliers around the state and the U.S. who work with Electric Boat in manufacturing subs.

The uncertainty started months ago when the Biden administration’s budget request for the Pentagon proposed procuring one Virginia-class submarine instead of the two-per-year cadence. They have cited budget caps as well as production delays for pulling back for fiscal year 2025.

Despite that request, House and Senate versions of the National Defense Authorization Act — the annual must-pass bill that authorizes federal defense programs — added back the second submarine, enabling $1 billion in incremental funding for it. But the current House defense appropriations bill leaves out funding for a second Virginia-class sub.

Congress confronted a similar push to eliminate a sub in 2013 with former President Barack Obama as well with former President Donald Trump’s budget proposal in 2020. In both instances, lawmakers revived the build rate for Virginia-class despite threats of cuts.

This year, Congress faces major budget constraints when crafting legislation to fund the government this fall as lawmakers continue to negotiate the NDAA and appropriations bills over the coming months.

“This program has had a history of ups and downs going back 10, 20 years and even longer, and that’s why we have a supply chain problem — a lot of people just got out of the business because it was just too unstable,” U.S. Rep. Joe Courtney, D-2nd District, said in an interview.

The current versions of the NDAA include language for two Virginia-class submarines. And while the bill got overwhelming bipartisan support out of the House Armed Services Committee, including from Courtney, the GOP-led NDAA ultimately included a number of amendments that were nonstarters for most House Democrats.

All five Democratic members of Connecticut’s congressional delegation voted against the House GOP’s version of the NDAA, citing “poison pill” amendments tacked onto the bill. Those included provisions to limit access to abortion and transgender health care as well as block diversity, equality and inclusion programs in the military.

“I applaud Chairman [Mike] Rogers [R-Ala.] and Ranking Member [Adam] Smith [D-Wash.] for reporting a bipartisan bill out of the Armed Services Committee,” U.S. Rep. Jim Himes, D-4th District, said after the vote last week. “Unfortunately, Republican leadership has refused to take this critical legislation seriously and allowed the adoption of dozens of toxic amendments.”

As the House geared up for passage of the NDAA last week, the White House released a statement of administration policy that it was “disappointed” that the House Armed Services Committee did not go along with its shipbuilding request, adding that it “strongly opposes” the incremental funding for a second Virginia-class sub “which industry is unable to produce on schedule.”

The statement also said it hopes Congress supports submarine industrial base investments to “reduce the backlog in attack submarine production and sustainment” and get to a production rate “needed to support the Navy’s requirement and our commitment to the Australia-United Kingdom-United States security partnership.” As part of AUKUS, Australia has agreed to initially buy three Virginia-class submarines from the U.S., but the first transfer is not expected to happen until the early 2030s.

“This is not the final word by any stretch for either bill, for our NDAA or House appropriations’ bill,” Courtney said.

On the Senate side, the Senate Armed Services Committee also easily approved its version of the NDAA with bipartisan support. The bill in its current form blows past top-line spending set by the budget caps in the Fiscal Responsibility Act, which was part of a deal to lift the debt ceiling last year.

“This national security support package recognizes the central role Connecticut plays in our nation’s defense efforts,” said U.S. Sen. Richard Blumenthal, D-Conn., who sits on the Armed Services Committee. “During the markup, I won $1.13 billion in funding for a second Virginia-class submarine essential to our continued undersea superiority.”

Both NDAA bills from the House and Senate are not final versions, and Congress will need to work through the differences in negotiations, particularly on finding a compromise on the more partisan and controversial parts of the legislation. The NDAA typically passes out of Congress with bipartisan support.

On top of that, Congress will need to keep negotiating appropriations bills. Since the NDAA only authorizes these programs and priorities, the spending legislation approves the money for them in the next fiscal year.

 

As things stand in the House GOP-led defense spending bill, there is no money for a second Virginia-class submarine that the current NDAA bills are seeking to authorize.

“The reason the bill doesn’t fund a second submarine is very simple,” U.S. Rep. Ken Calvert, R-Calif., chairman of the House Appropriations’ defense subcommittee, said at a hearing last week, according to Breaking Defense. “The contractors can’t build it. There are significant problems with the submarine industrial base that cannot be resolved with symbolic money.”

Members of Connecticut’s delegation have raised concerns about the lack of funding and what it would mean if implemented for Electric Boat and the smaller suppliers around the state. They also warned about the potential ramifications to fulfill shipbuilding commitments as part of AUKUS.

Electric Boat locations in Groton and Quonset Point in Rhode Island handle much of the Virginia-class shipbuilding, along with Huntington Ingalls Industries’ Newport News Shipbuilding in Virginia.

Courtney earned the nickname “Two-Sub Joe” when he first came to Congress in 2007 by increasing the production cadence from one to two subs per year. As the ranking member of the House Armed Services’ Seapower and Projection Forces Subcommittee, he has been advocating to keep production at the same pace.

A combination of disruptions have put a strain on the U.S. submarine industry and procurement: the pandemic, supply chain issues and a workforce that is aging and retiring. Companies like Electric Boat are hiring to fill those gaps and add to the ranks as production grows over the next decade.

Electric Boat came close to meeting its hiring targets in 2023 with about 5,300 new hires and set a new goal of another 5,000 employees in 2024. If Congress ultimately cuts production, Courtney said, Electric Boat and its workforce can weather the change, especially with other big programs like the Columbia-class submarines.

He argues the burden will fall more on smaller suppliers who will not be covered by other federal funding for the submarine industrial base.

“I get asked a lot from people at home who have been seeing the reporting on the budget and are asking whether or not that means there are going to be layoffs or a halt to the hiring,” Courtney said. “The answer to that is emphatically no.”

“People are feeling pretty good about the fact that they’re really meeting the hiring goals that are there,” he said about Electric Boat’s workforce. But “the supply chain companies who do not have great capital reserves [who] can’t absorb peaks and valleys as well — those are the ones who are clearly going to be impacted by taking a submarine out of the procurement budget.”

Courtney’s position to keep procurement at the same levels runs counter to Pentagon officials’ stance. They have cited both budget constraints and production delays for cutting back with the hopes of letting the industry catch up and get back on schedule.

“Virginia-class, to be clear, was trying to get to a better, more healthy dynamic where we can get to the two submarine a year production rate, and we thought that going a different direction was our best move in that case,” Mike McCord, the comptroller of the U.S. Department of Defense, said at a March hearing, noting subs that are supposed to be delivered this year were months behind.

At a hearing last month, Courtney asked U.S. Navy Secretary Carlos Del Toro about the supply chain companies that would miss out on the proposed investments in advanced procurement meant to bolster the supplier industrial base and submarine industry.

“Regarding specifically to these vendors, we’re in constant contact with these vendors. The purpose of advanced procurement money, however, isn’t to fully fund all the vendors that are in the supply chain,” Del Toro said at the May hearing. “It’s to fund those vendors that are most critical to the supply chain. I don’t think there’s ever been a confirmation that we can support, you know, full funding of all the vendors across the entire spectrum.”

Del Toro and others within the department said they remain committed to the shipbuilding plan to have 66 attack submarines in the service’s fleet. He said there are currently 50 submarines with nearly a dozen under construction and an additional four under contract. But 19 boats will be decommissioned in the coming years.

“It’s a real difference of opinion,” Courtney said, “about how do we succeed in getting the production pace where everybody wants it.”


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