U.S. Navy photo by Paul Farley. Public domain, via Wikimedia Commons.
Who builds what
Both General Dynamics Corporation (NYSE:GD)‘ Bath Iron Works shipbuilding company and Huntington Ingalls Industries Inc (NYSE:HII)‘ Ingalls Shipbuilding build the DDG 51 Aegis Destroyer, with the Navy typically buying ships from each builder.
In a move to save money, the Navy signed a 30-year shipbuilding plan that saw the purchase of 10 Aegis Destroyers for the price of nine. It also increased the Navy’s shipbuilding budget from $15 billion to almost $19 billion annually. Now, Rep. Randy Forbes (R-Va.), chairman of the House Armed Services Committee, has expressed grave concerns about funding the 30-year plan and has asked the Navy for “a scintilla of evidence” that it can be done.
One of the reasons the Navy’s costs are so astronomical is that the service also has to replace the Ohio, a nuclear-capable submarine dating to the 1980s. Adm. Jonathan Greenert, chief of Naval operations, has stated, “People ask me what is my No. 1 program of concern, and I will tell you it’s the Ohio replacement program.” Not only is the Ohio outdated, but the replacement program will also provide 70% of the United States’ nuclear deterrent capabilities.
With the price of the new subs and the need for new ships, the Navy is seeing its costs escalating, which of course conflicts with the 10-year, $500 billion cut to defense spending under sequestration .
