Electric Boat a budget winner–maybe

WASHINGTON–One of the big winners in the White House’s budget blueprint for 2012 is Electric Boat, which stands to benefit from a $4.7 billion request for the Navy’s Virginia class submarines.

That funding seeks to ensure that Electric Boat can proceed with plans to increase production from one Virginia class submarine a year to two.

But there’s a hitch: Congress is still hung up on a bill that would provide the funding needed to keep that second submarine on track for this current fiscal year.

“From a policy and a resources standpoint, nobody is questioning the value of this,” said Rep. Joe Courtney, D-2nd District.

And yet the second sub could get sidetracked, he said, because of a battle brewing over a $1 trillion funding bill to keep the government running for the remainder of fiscal year 2011, which is nearly five months underway.

Courtney sits on the House Armed Services Committee and has pushed for the accelerated timetable for the Navy to procure two subs a year instead of one. This year was supposed to be critical–the juncture at which the Navy secured increased funding to contract with Electric Boat for the second submarine.

“If a Defense Appropriations Act is not passed before the end of the fiscal year, the Navy will potentially be forced to invoke the cancelation clause, requiring a re-negotiation of all the ships under… contract impacting pricing and schedule,” the Navy said in response to questions from the Mirror.

The money–$1.24 million slated for EB–was supposed to start flowing on Jan. 31st. But the last Congress failed to pass a full-fledged funding bill for fiscal year 2011; lawmakers instead approved a stop-gap measure keeping funding essentially flat at 2010 levels.

“If you just continue spending at 2010 levels, that’s a problem,” Courtney said, because last year the Navy only had enough funding for one submarine.

In light of the congressional stalemate, the Navy and Electric Boat renegotiated their contract and set a new deadline–March 21st–for the Electric Boat to get the increased submarine funds.

The House is now in the midst of an intense debate on a 2011 spending bill that would provide increased defense funding. But because the GOP-drafted measure also includes a broad array of deep domestic funding cuts, it’s unlikely to go anywhere in the Senate.

“We are following this very closely–on daily basis,” said Bob Hamilton, an Electric Boat spokesman. “There is no significant impact to us at this point… We’re hopeful that the Navy is going to be able to resolve this issue.”

The current stop-gap law keeps the government running at 2010 levels through March 4.

Senate Democratic leaders have voiced strong opposition to the House bill. And they’ve begun discussions on drafting another short-term, stop-gap spending bill that would buy Congress more time to reconcile competing House and Senate spending plans for 2011. But House Speaker John Boehner, R-Ohio, said Thursday that he would not agree to another temporary spending bill unless it included spending cuts, a position that raises the stakes for any negotiations.

There’s increasing talk in Washington of a government shut down, as the two parties face off over the GOP’s proposed domestic spending cuts. And the longer the process drags out, Courtney and others say, the more complicated the second sub’s future becomes.

“If it drags out beyond the end of March, it becomes a real challenge for both the Navy and Electric Boat,” Courtney said. He pointed to remarks made Monday by Defense Secretary Robert Gates, who chastised Congress for its failure to act on a 2011 defense appropriations bill.

“This department has been operating under a continuing resolution going on five months, resulting in difficulties that may soon turn into a crisis, depending on what happens on the Hill during the next few weeks,” Gates said on Monday. “If forced to operate under a full-year continuing resolution, the department would only receive about $526 billion–a cut of $23 billion. The damage done across our military from that reduction would be magnified as it comes halfway through the fiscal year.”

The bottom line, Gates suggested, is that new programs were being put in jeopardy.

The Navy indicated that a prolonged spending stalemate this fiscal year could make moving ahead on the two subs in fiscal year 2012 more difficult.

“Delaying the award of the ship until FY12 would impact the scheduling of work for the 2nd FY11 ship and all future ships due to the change in requirements for manpower, material, methods, and facility improvements that would be necessary to support construction of three ships per year,” the Navy statement said.

“The frustration is that this is not an issue in dispute,” Courtney said of the plan to build a second Virginia class submarine, adding that the White House, the Navy, and both parties in Congress are all supportive of the second submarine. “It’s just this budget snafu that we’re in the middle of that’s obviously dragged it into the domestic spending disputes and that’s slowing it down.”

Courtney said that although he’s anxious about how this will play out in the next few weeks, he’s buoyed by Obama’s request for 2012.