Navy To HASC: We’re About To Sign Sub Deals We Can’t Pay For

http://breakingdefense.com/2013/09/12/navy-to-hasc-were-about-to-sign-sub-deals-we-cant-pay-for/



The $5 ~ $7 billion dollar USS Minnesota

Navy To HASC: We’re About To Sign Sub Deals We Can’t Pay For
By Sydney J. Freedberg Jr. on September 12, 2013 at 3:17 PM

CAPITOL HILL: The United States Navy is negotiating to buy 10 nuclear submarines that it probably can’t pay for. But the service is going ahead regardless, counting on the Pentagon and Congress to make up the money as long as the budget cuts known as sequestration continue.

The sequester doesn’t mean the Navy can’t afford to pay the contractors building the subs, General Dynamics’ Electric Boat Division and Huntington-Ingalls Industries’ Newport News shipyard, the Navy’s Program Executive Officer for Submarines assured me when I buttonholed him this morning after a hearing of the House Armed Services seapower subcommittee. But “the shipbuilder piece is only about two-thirds of the price,” Rear Adm. David Johnson went on. The remaining third is what’s called “government-furnished equipment,” and that’s what sequestration puts in doubt.

“GFE are things like the combat weapons system,” Johnson explained. Without them, he said, “you can’t deliver the ship, you can’t test the ship” – and you can’t actually use it for any military purpose.

“The way we dealt with [sequestration in fiscal] ’13 is, we essentially said we’d buy the government-furnished equipment part later and fully fund the shipbuilding part,” Johnson told me. “That would be the same strategy for the multi-year [procurement contract]” now under negotiation. Normally the Navy pays for the entire ship up front, but that’s increasingly difficult under sequestration, which is what compels the use of budget gimmicks and delaying tactics.