Defense Business Brief: A year without sub parts; Big Javelin deal; DOD’s new payment structure; and more...
If the U.S. Navy wants new attack submarines faster, it needs to start ordering parts ASAP. That’s the message from a top executive at Newport News Shipbuilding, one of the two yards that jointly build all of the Navy’s submarines.
The service hasn’t awarded contracts for Virginia-class submarine parts since early 2022, thanks to a dispute with General Dynamics Electric Boat—NNS’s partner—over who is liable if a Tomahawk cruise missile accidentally damages a ship. The delays have concerned lawmakers who referenced the so-called indemnification dispute in the fiscal 2023 National Defense Authorization Act.
But the delays have also prevented EB and NNS from ordering bespoke parts for new submarines at a time when the Navy wants to increase Virginia-class submarine production for itself and also sell them to Australia.
“The suppliers clearly could have and would have started a year or more ago if the funding had been there,” NNS President Jennifer Boykin said Friday on the eve of the christening of the Virginia-class submarine Massachusetts (SSN 798). “As we look forward and we scheduled the next block of boats, those delivery dates will play into what schedule we agree to with the Navy.”
NNS is a division of HII, which also builds aircraft carriers.
Submarines’ ability to move undetected under the water make them a key U.S. weapon, particularly as the Pentagon reorients to counter China’s military build-up in the Pacific. The Biden administration has been making investments in submarine parts and technology and collaborating with the United Kingdom and Australia to develop new submarines under the AUKUS pact.
In late March, Navy Secretary Carlos Del Toro told lawmakers that the Virginia program was “significantly behind” its two-ship-per-year goal, USNI News reported.
On Friday, Boykin said that on-time delivery depends on having certain parts ordered well ahead.
“Any time you're late [with funding] at the beginning, it's going to have some impact on them late at the end,” she said.
Companies are still dealing with supply-chain problems, workforce shortages, and inflation that were created or exacerbated by the pandemic.
“In order for the assembly line to get healthy and to begin to increase the rate, the worst thing we can do as an enterprise is starve the beginning” of the supply chain,” Boykin said. “That's part of what we're really working with the Navy on—to get advanced funding to those suppliers who are already struggling with workforce, etcetera, is key if we're going to, in two or three or five years later, actually increase our throughput rate. When you start the beginning, because the end is not coming out, you're not going to change the scenario.”
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This week: Speaking of AUKUS, the House Foreign Affairs Committee is holding a Wednesday hearing about “Modernizing U.S. Arms Exports and a Stronger AUKUS,” featuring Jessica Lewis, assistant secretary of the State Department’s Political-Military Affairs Bureau, and Mara Karlin, the assistant defense secretary for strategies, plans, and capabilities. You can watch it here.
The Pentagon on Monday afternoon confirmed that it would lower the up-front payment rate to its contractors. Large contractors will get paid 80 percent at the beginning of a contract, down from the 90-percent level installed during the pandemic. Small businesses will still get 95 percent up front, up from 90 percent before COVID. The revised rates apply to contracts awarded on or after July 7. Read the memo here.
The Army has awarded Javelin makers Lockheed Martin and Raytheon the first installment of what could be a $7 billion deal for the anti-tank missiles. “This contract allows Javelin Missile System procurement and production support for the Army, Marines, Navy, and international customers,” the Army said in a statement.
The deal sets the stage to increase Javelin production to 3,960 missiles per year by late 2026, according to Lockheed. “The contract will also provide tooling, test equipment and non-recurring effort for the Javelin production ramp that will support increasing Javelin production capacity both at [Lockheed and Raytheon] factories and throughout the supply chain,” the company said.