Will Maine defense contractors be casualties of political skirmish between Obama and Congress?
By BETH BROGAN | Bangor Daily News, Maine | Published: April 27, 2014
BATH, Maine — Arleigh Burke-class destroyers that could be built by Bath Iron Works in future years, along with engines that North Berwick-based Pratt & Whitney is supposed to provide for Air Force fighter jets, are pawns in a high-stakes political game between Congress and President Barack Obama’s administration.
According to a new report by the Department of Defense, three DDG 51 destroyers, along with engines for the F-35 fighter jet slated to be built by Pratt & Whitney, could be jeopardized unless Congress repeals automatic budget cuts, known as sequestration, set to take effect in 2016.
The destroyers are in line to be built at BIW and Ingalls Shipbuilding in Mississippi. How the cuts would affect each shipyard has yet to be determined.
Cuts also would include an entire fleet of Air Force tankers, Marine Corps ground forces and P8 aircraft.
Should the budget cuts not be repealed, limits established by the Budget Control Act would require the Pentagon to trim $115 billion from its proposed spending plan for fiscal years 2016 to 2019, Cmdr. Bill Urban, defense press officer for the Office of the Assistant Secretary of Defense for Public Affairs, said Friday.
The Department of Defense argues that the proposed budget — without the cuts — is necessary “to protect and advance U.S. interests and to execute the updated defense strategy.” Pentagon officials warn that failing to fund the full amount “increase[s] levels of risks for some missions.”
“Overall, sequester-level cuts would result in a military that is too small to fully meet the requirements of our strategy, thereby significantly increasing national security risks both in the short- and long-term,” the Department of Defense said in a release about the report.
Jay Korman, senior Navy analyst with the Washington, D.C.-based consulting firm The Avascent Group, said Thursday that the coming debate over sequestration “is kind of a game of chicken between the Republican House and the administration.”
In its report, the Department of Defense included among its proposed cuts “solid programs that Congress typically supports,” largely in an effort to send Congress and the defense industry a message, Korman said. That message is that if members of Congress go through with the cuts, they will have to answer for lost jobs and popular programs in their home districts.
The high-profile cuts suggested in the report include programs that would affect General Dynamics, parent company of Bath Iron Works; United Technologies Inc., which owns Pratt & Whitney; and Lockheed Martin, Boeing and other large companies, Korman said. Those companies — which have strong lobbying presences on Capitol Hill — will argue that the ships, aircraft and other projects are necessary, Korman said.
Pratt & Whitney announced in March that it had secured a $1 billion Department of Defense contract to build 38 engines for F-35 fighter jets. Should the budget cuts take effect, procurement of those jets would be reduced by 17 aircraft, according to the report.
“There’s a lot of gamesmanship out there, and all of this should come to a head in the next several weeks and months,” Korman said. “But there’s going to be a real debate on Capitol Hill as to whether to fund the administration’s line … it really comes down to the tea party versus the defense hawks to see who wins.”
Sen. Susan Collins, R-Maine, said Thursday that the report does highlight a “worst-case scenario,” but she said sequestration would be “a disaster.”
“The Navy is clearly very concerned about the fiscal constraints under which we would have to operate if sequestration comes roaring back in 2016,” she said. “The Navy is trying to heighten awareness by detailing the worst-case scenario, and I think they are right to do so.”
Speaking to the Armed Services Committee on April 2, Sen. Angus King, I-Maine, also expressed concern about the impact of the budget cuts on the military, and suggested that the military is uniquely positioned to lead discussion of a solution to sequestration.
Jim DeMartini, spokesman for Bath Iron Works, declined to speculate on “a big bunch of ifs” that are “a whole bunch of years down the pike.”
“We certainly don’t want to see DDG 51 rates going to one ship a year because we believe the Navy needs these ships, as the Navy has said all along,” he added. “The bottom line is, we’re going to keep doing what we’re doing, and that is to do everything we possibly can across the entire spectrum of the business to streamline our processes, reduce our costs and be the most affordable builder of naval surface combatants.”
Matthew Bates, spokesman for Pratt & Whitney Military Engines, also declined to speculate on “what-if scenarios,” but said delays in procurement do affect costs.
“We need production program stability in order to meet the cost objectives of the program,” Bates wrote in an email. “Pratt & Whitney has invested more than $65 million into cost-cutting initiatives on the F135 engine program, and we’ve reduced the cost of the engine by 43 percent. We’ve reduced the price of the engine with every lot, and we anticipate further price reductions on the seventh and eighth lot of engines after we conclude our negotiations [anticipated by the end of the second quarter].”