Newport News Shipbuilding, Navy reach deal on two-carrier purchase
By HUGH LESSIG | The Daily Press | Published: January 3, 2019
NEWPORT NEWS, Va. (Tribune News Service) —The Navy has reached an agreement with Huntington Ingalls Industries for a block purchase of two aircraft carriers, the latest move toward an expanded fleet and a boost to HII’s Newport News shipyard.
The deal will cover the future USS Enterprise also known as CVN-80, now undergoing advance work in Newport News, plus the as-yet-unnamed CVN-81. These are the third and fourth carriers of the Gerald R. Ford class.
Supporters say the move will create economies of scale while shoring up the small- and medium-sized businesses that supply the shipyard with parts and services.
Taxpayers will see a savings of $4 billion compared to purchasing the two ships separately, according published reports quoting Rep. Joe Courtney, D-Conn., who will oversee the House Armed Services panel in charge of shipbuilding.
Earlier estimates had been in the range of $2.5 billion.
It will also provide a quicker path to expanding the carrier fleet from 11 to 12, part of a larger plan to achieve a 355-ship Navy. The current fleet numbers about 287 ships, and the expansion will take years.
For months, HII and hawkish members of Congress had lobbied for the block purchase, something not done since the defense buildup during the Reagan administration.
The Navy showed interest in the idea nine months ago and asked HII for details. Meanwhile, Congress included language in the 2019 defense authorization bill to allow the purchase if the Navy decided to move on it.
HII’s Newport News Shipbuilding division is the sole designer and builder of nuclear-powered aircraft carriers for the Navy, ships that cost in excess of $11 billion each.
Defense Department letter
James F. Geurts, the Navy’s chief weapons buyer, told Congress in November that he expected a decision on a two-carrier purchase by year’s end. The deadline was made with a few hours to spare, with first word of the deal coming Monday afternoon, New Year’s Eve.
That day, the Defense Department notified select members of Congress in a letter that it had reached an agreement. Sen. Tim Kaine issued a news release praising the deal, followed by his Virginia colleague, Sen. Mark R. Warner.
Capt. Danny Hernandez, a spokesman for Geurts, confirmed the agreement Wednesday and said more details would be forthcoming after the contract award.
HII spokeswoman Beci Brenton said in a statement Wednesday that a two-carrier acquisition is “a significant step toward building these ships more affordably. Although there is more work to be done, it is important to note that the multi-ship purchase of aircraft carriers helps stabilize the Newport News Shipbuilding workforce, enables the purchase of material in quantity, and permits a fragile supplier base of more than 2,000 in 46 states to phase work more efficiently.”
The Newport News shipyard spent much of 2018 in a steady hiring mode, bringing in some 400 new employees per month. It is Virginia’s largest industrial employer, with more than 23,000 people on the payroll, although it offered voluntary buyouts to 2,500 employees as the year closed, which executives characterized as a reorganization.
Kaine, a member of the Senate Armed Services Committee, said he was “thrilled the Navy has decided to pursue a block buy for aircraft carriers, something I’ve been advocating to save billions in taxpayer dollars and offer more certainty to the Hampton Roads defense community.”
Warner added that the move not only saves money, but “makes a critical investment in our nation’s defense by ensuring the Navy has the capabilities needed to combat any adversary.”