Sikorsky, Electric Boat, others could get business boost from federal proposal

CT Insider

By: Lisa Hagen,

December 13, 2022

Connecticut’s major defense companies as well as the supply chain that reinforces the industry would receive a major boost from a bill that Congress must pass annually to authorize the budget for military spending.

The National Defense Authorization Act authorizes a total of $858 billion that includes a 4.6% pay raise and a 2% increase in housing allowances for troops, a repeal of the Pentagon’s COVID-19 vaccine mandate for service members and an additional $800 million in security aid for Ukraine.

And because of Connecticut lawmakers’ well-positioned roles in Washington, the state’s defense industry will significantly benefit from this bill, particularly the big three defense contractors — Sikorsky, General Dynamics Electric Boat and Raytheon Technologies’ Pratt & Whitney.

The House passed the defense bill Thursday, and the Senate is expected to approve it this week. But because the NDAA only authorizes funding, Congress still needs to clear an appropriations bill to fund the government, which would include the new budget levels for the defense sector.

“Connecticut is one of the top five recipients of federal defense dollars as a percentage of state GDP, and this year’s NDAA will continue to support the tens of thousands of workers, jobs, and small businesses in this industry,” U.S. Rep. John Larson, D-1st District, said in a statement.

“Connecticut machinists and workers provide the best equipment for our warfighters, and the products they manufacture are sought after around the world,” Larson added.

U.S. Rep. Joe Courtney, D-2nd District, a member of the House Armed Services Committee, said the funding, especially for the eastern parts of Connecticut in his district, will go toward an investment in submarine supply chain and workforce development. He noted that it comes at a time when defense contractors writ large have been rattled by the pandemic as well as Russia’s ongoing war in Ukraine.

A total of $750 million — a much larger increase from the previous budget — would go toward two existing programs. The first is $227 million that will help address gaps in the workforce, especially for smaller companies in the defense industry and those who serve as suppliers.

The remaining money will go toward helping supplier development. Courtney said L.M. Gill, a welding and manufacturing company in Manchester whose largest client is Electric Boat, accessed some of that money last year to help invest in new equipment.

“All of these contractors have been kind of caught flat-footed in terms of capacity. We really have been sort of operating in an environment that we didn’t expect a drawdown of material as quickly as has happened for good reason,” Courtney said in an interview, referring to the war in Ukraine.

“The ability to restock is really being hindered by the same problems that are throughout the economy in terms of finding people to take on the work,” he added. “I think this is going to be a much broader opportunity for not just the big companies but the small supply chain companies to access programs that are skilling people up.”

Courtney’s role as the chairman of the Subcommittee on Seapower and Projection Forces has given him major leverage on behalf of Connecticut when Congress negotiates new projects and funding. He has also played a large role related to the AUKUS defense alliance between Australia, the United Kingdom and the United States. The NDAA would establish a new training program for Australia’s Navy for when it eventually gets a new fleet of nuclear-powered subs.

The NDAA would approve $15 billion for submarine construction, repairs and research. That tranche of money includes an authorization of $6.5 billion to keep up with the construction of two Virginia-class subs a year at Electric Boat for the next few years. The legislation would also approve $15.5 million in funding to relocate an underwater electromagnetic measurement system at Naval Submarine Base New London in Groton.

Courtney is hopeful the authorized funding will help address a decline in the workforce as skilled workers age out and people shift jobs, which was exacerbated amid the pandemic. He said he checks the number of job openings every day and the number is “far higher than normal.”

“That’s partly because the volume of work is growing, but it’s also because the shift in the workforce in terms of the older Baby Boomer cohort is leaving in higher-than-expected numbers, driven I’m sure by COVID and the Great Resignation,” Courtney said.

The bill is also a major boon for the aerospace industry in Connecticut.

Pratt & Whitney will see a bump in the procurement of F-35 aircraft for the Air Force, Navy and Marine Corps: 69 of those aircraft, which is eight more than the budget request.

Sikorsky will also see increases for three of its helicopters: 27 UH-60 Black Hawks, 12 CH-53K heavy lift helicopters and 20 combat rescue helicopters. It is a boost for the Lockheed Martin company, which recently lost a bid to build the Army’s replacement for the Black Hawks.

Beyond the defense contractors and suppliers that will benefit, some school districts in Connecticut will see federal assistance.

The NDAA authorizes $50 million of supplemental impact aid, which goes to schools that educate a higher proportion of students from military families. Because many of those families live at tax-exempt properties, the program helps replace the lost funding for public schools in military areas. Schools, like in Groton and Ledyard, will receive a portion of that aid from the Defense Department, which provides that assistance along with the Education Department.

Now, the bill is headed to the Senate this week for consideration and a vote, where it is expected to advance with bipartisan support and will then head to President Joe Biden’s desk for his signature.

U.S. Sen. Chris Murphy, D-Conn., however, criticized the process of passing the NDAA without debate or votes on amendments. Murphy, chairman of the Foreign Relations Subcommittee on Near East, South Asia, Central Asia and Counterterrorism, acknowledged that the bill will get through the Senate, but he questioned why the U.S. is not focusing more on “investments in nonmilitary tools of influence.”

“We should imagine this world in which we fight toe-to-toe with Chinese and the Russians and other adversaries in the development, information, technology, energy and diplomatic spheres. We should imagine that world and then put in place a plan to achieve it,” Murphy said in a floor speech last Thursday.

But without Congress passing a bill to fund the government for the rest of fiscal year 2023 and allocate the money including from the NDAA, much of the funding for these defense-related programs would be delayed.

Since government funding runs out by the end of Friday, Congress is likely to clear another short-term bill to keep it going at existing levels until they reach a deal on a larger omnibus appropriations package. If they cannot reach an agreement on the latter over the next week or so, lawmakers are expected to hold off an omnibus until after the new year.

“Unfunded authorizations are a futile exercise. If we don’t do an omnibus, all new starts or increases [in the NDAA] get basically put on hold,” Courtney said.

“Last year’s level of funding for a lot of these programs is not adequate for U.S. military readiness,” he added. “There is a lot riding on getting the omnibus completed.”

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