Navy Proposal to Buy Two Carriers Draws Scrutiny From Pentagon

(Bloomberg) -- The Pentagon’s No. 2 civilian is reviewing a Navy proposal to buy the third and fourth vessels in the Gerald R. Ford aircraft carrier program under one contract to assess whether the arrangement will save money as the service claims.

“We are conducting an evaluation to ensure we have the warfighting capabilities to compete and win,” Deputy Defense Secretary Pat Shanahan said in a statement to Bloomberg News. “Any decision will factor in strengthening the industrial base and delivering best value for taxpayers."

Navy Proposal to Buy Two Carriers Draws Scrutiny From Pentagon

Huntington Ingalls Industries Inc., the builder of the new carrier class expected to cost $58 billion, would benefit if the Navy commits to the purchase of an additional two carriers, which the service has said it’s exploring to determine whether significant savings in labor and money can be achieved.

While the Navy has yet to submit such a plan to Congress, lawmakers approved the block buy in the fiscal 2019 defense policy and spending bills. The service has cited a need to deploy 12 aircraft carriers, up from the 11 today, as key to its push to expand its fleet by 25 percent to 355 vessels.

But the carrier program remains troubled, with Huntington Ingalls falling short of the Navy’s demand to cut labor expanses on the second of the warships to stay within an $11.39 billion cost cap mandated by Congress.

Navy Secretary Richard Spencer told reporters in August that the Navy’s preliminary estimate is that a two-vessel contracting purchase could save the service $2.5 billion, and “we are trying to get it higher.” Captain Danny Hernandez, a Navy spokesman, said in an email that the proposal is still under review and “we expect to have a decision in mid-fall."

Beci Brenton, a spokeswoman for Newport News, Virginia-based Huntington Ingalls, said in an email that “we are still negotiating”with the Navy.

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