A bipartisan group of senators wants more details from the Navy and the White House Office of Management and Budget on a funding scheme that shipbuilders want to employ to help pay for 17 new submarines under negotiations, according to two letters the group submitted on Friday.
The group, led by Sen. Tim Kaine (D-Va.), quizzed OMB and Secretary of the Navy Carlos Del Toro on the Shipyard Accountability and Workforce Support funding plan, also known as SAWS, which the Navy developed to pull money from submarine contracts for boats that have yet to start construction to increase shipbuilders’ wages and build more infrastructure.
“It is our understanding that over months of conversation Pentagon leadership, the Navy, and industry reached an agreement to maximize use of taxpayer funding for construction of the next tranche of Columbia-class and Virginia-class submarines – including by raising wages to attract and retain America’s skilled and organized shipyard workforce, addressing rising costs, and advancing much-needed infrastructure investments, all to improve program reliability and schedule,” reads the letter to Del Toro.
“Based on the information available so far, the Shipbuilder Accountability and Workforce Support agreement strikes us as a promising approach to ensure our submarine industrial base rises to the occasion, accelerates submarine production, and fully meets the critical and building demand on U.S. shipyards.”
The group – which includes Sen. Jeanne Shaheen (D-N.H.), Angus King (I-Maine), Kevin Cramer (R-N.D.) and Mark Warner (D-Va.) – raised concerns with Del Toro and OMB director Shalanda Young about not briefing the SAWS plan to the Senate until September, despite the initiative being under development for more than a year.
“The Navy’s hesitance to both notify Congress earlier and take a definitive stance is concerning. Rebuilding the submarine industrial base demands decisive leadership and steady communication between the Navy, Congress, and the Executive Branch. We therefore urge more consistent communication with Congress and with OMB so that all parties clearly understand the Navy’s position on SAWS and overall plans to get our nation’s submarine production on track,” reads the letter to Del Toro.
“It is critical that our submarine programs be on schedule and on budget. The news that the Navy is projected to be an astonishing $17 billion short in the Virginia-class program alone in the next six years is especially distressing.”
An almost 20 percent cost increase in submarine shipbuilding emerged as the Navy entered into negotiations for the last two Block V Virginia-class nuclear-powered attack submarines with General Dynamic Electric Boat last year, USNI News understands.
The future Baltimore (SSN-812) and Atlanta (SSN-813) were two unpriced contract options attached to the initial 2019 Block V contract. Congress had appropriated $9.34 billion in Fiscal Year 2024 for the two attack boats, but the price was still about $2 billion short, USNI News previously reported.
The Navy developed SAWS to take workforce money that was frozen in other submarine contracts and use it to pay for the new boats and help make up the cost increase for planned multi-years for 10 Block VI Virginia-class attack submarines and five Build II Columbia-class boomers.
While SAWS was the Navy’s plan, the service backed away from the proposal and OMB instead asked for a $1.94 billion anomaly in the most recent temporary federal spending bill to pay for Baltimore and Atlanta. Congress ultimately rejected the anomaly, leaving the Navy short for the two boats.
In a conference call with investors last week, GD CEO Phebe Novakovic said the contract for the boats was in the works in the near future, but she didn’t have a “good sense” of when the GD and the government would ink a deal for the Block VI and Columbia contracts.
“I expect that the FY 24 ships that are not yet under contract will happen maybe in the next few months, but I don’t have a good sense of timing for the remainder of their negotiations on Block VI or Build II of Columbia,” she said.
“It’s going to be hard to get those ships under contract … So, we’re going to have to work that with our customer and Congress.”
