The U.S. Navy is speeding up its weapons purchases in an attempt to inject money into its supply chain and keep small businesses afloat amid the coronavirus pandemic.
James “Hondo” Guerts, the Navy’s top weapons buyer, pointed to nearly $2 billion in recent awards for Boeing P-8 submarine hunters and Raytheon AIM-9X air-to-air missiles, saying that was just the beginning of efforts to accelerate various deals. The aim is to quickly pay prime contractors so that money flows to their smaller suppliers.
“I hear stories of second-, third- and fourth-tier suppliers that were worried about going out of business, worried about how they would keep paying their salaries,” Geurts said in a Wednesday conference call with reporters. “Our ability to move and accelerate work into the defense [industrial] base and then have that be pushed out to those suppliers is absolutely critical.”
The hope is that the funds can keep those suppliers’ production lines moving or at least ready to resume work once the pandemic slows or ends in the months ahead.
“When we’re ready to recover, we need to make sure they’re healthy and ready to roll as we accelerate out of recovery,” Geurts said.
In a National Defense Industrial Association survey of 458 small businesses — more than half of which were companies with revenues under $5 million — 62 percent of respondents said they have experienced coronavirus-related disruptions to cash flow.
“Most commonly reported causes are cuts to billable hours, delayed payments from [prime] contractors and government customers due to a shutdown or telework and a lack of telework options or schedule flexibility in contracts,” the association said.
Last week, Lockheed Martin, the world’s largest defense contractor, said it would send “more than $50 million” to small- and medium-sized suppliers to “ensure they have the financial means to continue to operate, sustain jobs, and support the economy.”
Over the past week, Geurts said, “major shipyards … have pushed hundreds of millions of dollars out to this supply base.”
The Navy plans to accelerate the purchase of a new San Antonio-class amphibious transport dock (LPD-31) as well as new new landing craft utility ships, he said.
The Navy is still on track to choose a company to build a new frigate in the coming weeks.
“There have been no delays or disruption to our process due to the virus on that program, Guerts said.