Congress close to keeping aircraft carrier work on track
NORFOLK, Va. — Congress is moving closer to providing money that would keep aircraft carrier projects on track at Newport News Shipbuilding, but the legislation wouldn’t stave off billions in automatic Pentagon reductions, including cutbacks that could take a bite out of Hampton Roads’ economy.
The Senate may vote today on a bill to fund the federal government for the rest of the 2013 fiscal year. The measure includes $4.6 billion in new money that Navy leaders said weeks ago was needed to avoid a list of cuts that include $287 million in ship overhauls at private shipyards in southeastern Virginia.
But the Navy’s list of programs and projects that would be cut has been evolving, and the private yards are still waiting to see whether they will be unscathed. Those contracts, which involve the overhauls of 11 vessels, are an economic lifeblood for two shipyards and their subcontractors that collectively employ thousands of skilled workers.
At the same time, a senior Pentagon official reiterated this week that most of the Defense Department’s civilian employees will be required to take off one day a week, without pay, from late April until Sept. 30 if automatic defense cuts aren’t undone. The mandatory furloughs would affect as many as 39,000 Navy and Marine Corps civilian workers in Hampton Roads.
At issue are two related spending issues: funding the federal government for the remainder of the 2013 fiscal year, which ends Sept. 30, and dealing with $85 billion in automatic budget cuts – known as sequestration – over the same period.
A politically divided Congress, which hasn’t agreed on an annual budget, funded government operations only through March 27 under what is called a continuing resolution, or CR. The Navy has said the short-term budget, which mirrors 2012 spending, gives them billions less than they expected in 2013.
Legislation to fund the rest of the fiscal year was approved by the U.S. House last week and may have a Senate vote today. If the measure passes the Senate – and the House approves other changes made by senators – the Navy would receive operation and maintenance money that top officers say is needed to shore up their 2013 budget.
The legislation specifically provides money for Newport News Shipbuilding to refuel the carrier Abraham Lincoln, dismantle the retired carrier Enterprise and begin construction on a new carrier, the John F. Kennedy – all projects that would otherwise stall. Altogether, the carrier work adds up to more than $3 billion, according to the office of U.S. Sen. Mark Warner, who along with other Virginia legislators pushed to include the projects in the budget bill.
However, the Navy still has to cut another $4 billion as part of an $85 billion reduction in federal spending required under sequestration. The reductions, half in defense and half in domestic spending, began March 1 and are the first phase of $1.2 trillion in automatic cuts over 10 years.
Earlier this year, with both issues bearing down on the Navy, Adm. Jonathan Greenert, chief of naval operations, distributed a detailed 11-page plan of “potential actions” that could come to pass under each scenario. The document offered side-by-side comparisons, with one column detailing cuts to be made if the current bill related to the continuing resolution doesn’t pass, and a separate column of potential sequestration cuts.
On the continuing resolution side of the ledger, the Navy included $493 million in ship overhaul contracts, including the work on 11 warships in Hampton Roads. The Navy’s sequestration list included employee furloughs and cancellation of some deployments, training operations and several military construction and repair projects.
Now, the lists have merged as the Navy figures out how to find $4 billion in sequestration cuts even if the larger 2013 budget comes through.
“At this point, right now, there is no difference between the CR and the sequestration. We are short of money,” said a Navy official familiar with the discussion, speaking on the condition of anonymity. “We’re going to look at the whole list of things to see what we can do.”
Bill Crow, president of the Virginia Ship Repair Association, said he would be surprised if the Navy canceled the maintenance contracts in Hampton Roads. The shipyards warned that significant reductions in Navy work would lead to layoffs and the possible loss of skilled workers.
The industry employs about 40,000 locally, half at Newport News Shipbuilding.
The Navy has a vested interest in keeping those contracts on schedule so its ships are properly maintained, Crow said. “My hope and desire would be that the Navy would follow through.”
Craig Quigley, executive director of the Hampton Roads Military and Federal Facilities Alliance, said there was still much uncertainty about how the defense cuts might affect the region. But the recent congressional activity helps.
“I feel a lot better than I did two weeks ago,” Quigley said. “There’s still concerns in my mind. A lot of them are being addressed by the legislation that is being worked on right now.”
The Navy official said that when examining where to cut, the first priority is sufficiently funding forward operations, including war-related deployments and training. Next on the list are two items of equal importance: ship and equipment maintenance and civilian employee furloughs.
Final decisions on cuts won’t be made until Congress and President Barack Obama have approved a budget for the rest of the fiscal year, the official said. The elected leaders need to approve the spending bill by March 27 to avoid a government shutdown.
That budget proposal isn’t enough to void the Pentagon’s plan to furlough workers – forcing them to give up what amounts to 8 percent of their annual pay.
Robert Hale, the Defense Department’s comptroller, told staff members earlier this week that without the unpaid days off, the military would have to cut too deeply into operations and maintenance. Requiring most employees to take off a total of 22 days without pay this spring and summer will save the Pentagon about $5 billion. Most will likely be off on Fridays or Mondays, he said.
Quigley said none of the cuts will sit well in Hampton Roads, where almost half of the economy is fueled by federal defense spending. But change is coming, he said.
“In an era of shrinking budgets, maybe this is what good news looks like moving forward,” Quigley said. “It is certainly an improvement from where we were weeks ago.”