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Panetta: Reduced Navy Fleet Size Won’t Sink US Shipbuilding, Defense Industries

DEFCON Hill - April 2, 2012, By Carlo Munoz

The Navy's new five-year shipbuilding plan provides adequate support for U.S. defense industry firms, even if it calls for a smaller number of vessels, according to Defense Secretary Leon Panetta.

The new plan, sent to Congress last Wednesday, is based on the goal of building a 300-ship fleet for the Navy.

That plan falls short of the service's original 313-ship minimum it had set in previous years.

It also falls well short of the 500-ship fleet service leaders say is required to meet the base demands of U.S. combat commanders around the globe.

"There'll be some ups and downs and there are some ships that obviously we'll draw down that are outdated. But overall, we are going to . . . not only maintain, but increase our ships in the Navy," Panetta told reporters Sunday after a speech aboard the USS Peleliu.

The ship strategy, he added, will generate enough work to keep U.S. shipbuilders afloat, according to Panetta.

"I want to maintain our industrial base for the future so that we can produce the ships we need for the future. And I want to do it in American shipyards," he said.

"I don't want to do it abroad . . . and we're committed to this," Panetta added.

But the ramped-down rate in the new Navy plan and its impact to American shipbuilders is drawing concern from Capitol Hill.

A number of House lawmakers took aim at the service's plan during last Thursday's House Armed Services seapower and projected forces subcommittee hearing.

"Is [the plan] right for the Navy and is it right for the industrial base? I'm concerned at all those different levels, our capabilities both on the defensive side and our industrial base capabilities," Rep. Rob Wittman (R-Va.) told Navy leaders.

"We talk a lot in here about our industrial base . . . [and] I understand the big numbers and I certainly understand the constraints you're under," panel member Rep. Chellie Pingree (D-Maine) said. "But looking at it from the other side, those are some of the concerns I'm looking at," she added.

Service leaders attempted to ease lawmakers' concerns during the hearing.

The Navy is pursuing a number of multiyear contracts with U.S. defense firms, which would help stabilize the industrial base, Navy acquisition chief Sean Stackley said during the hearing.

These type of deals essentially guarantee a contractor steady work over the five-year span of a given multiyear contract. The contracts can also help the Navy spread the costs of a given program and generate savings over the life of the deal.

Service leaders are pursuing multiyear deals for the Virginia-class submarine, V-22 Osprey tiltrotor aircraft and for the Arleigh-Burke class of destroyers.

Aside from those deals, the Navy is still facing some tough decisions in balancing its new plan with industry and lawmaker concerns, acknowledged Vice Adm. Terry Blake, deputy chief of naval operations for integration of capabilities and resources.

Navy brass seriously considered "the second- and third-order ramifications to the industrial base" when cobbling together the new shipbuilding strategy, Blake explained at the same hearing.

The service's calculation was if any decision in the plan nixes a part of the fleet, but allows the Navy to bring that capability back at a later date, then the U.S. firms would be safe.

However, if a part of the fleet is cut permanently, "then we have to present to our leadership the fact that this may be an irreversible decision," Blake explained.

But while the Navy, along with the rest of the Pentagon, is under tremendous pressure to cut costs, sometimes that formula can't be applied as much as industry would like.

"The fact [is] that we may not be able to reconstitute that [capability] at some future date," Blake said. "Then the question takes on an even more serious tone.”


The information above is for general awareness only and does not necessarily reflect the views of the Office of Economic Adjustment or the Department of Defense as a whole.

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