May 5, 2014

GROTON – Now that the Navy has signed the largest shipbuilding contract in its history with Electric Boat, the service will save $2 billion and get 10 attack submarines for roughly the price of nine.

At the same time, the state’s congressional delegation is preparing to argue for placing the cost of EB’s other major project, replacement of the Ohio class of ballistic-missile submarines, into a special budgetary category meant to relieve pressure on other Navy shipbuilding programs.

What this means for EB hiring is an increase in the trades jobs now at Quonset Point, R.I. and later in Groton. Engineering jobs in Groton and New London will continue to increase gradually.

U.S. Sens. Richard Blumenthal and Chris Murphy and U.S. Rep. Joe Courtney lauded the $2 billion in savings on Virginia-class construction during a press conference Monday at Electric Boat and celebrated the stability they say the $17.6 billion contract will bring to EB and to more than 350 submarine suppliers throughout the state.

EB builds two Virginia-class submarines per year with Newport News Shipbuilding in Virginia and is designing the new class of ballistic-missile submarines.

Courtney, D-2nd District, helped insert policy language into the fiscal year 2015 defense authorization act that would set up a fund outside of the Navy’s shipbuilding budget to pay for the 12 ballistic-missile submarines. Otherwise, he said, the $80 billion design and construction program would “basically suffocate” the other shipbuilding programs.

The full House Armed Services Committee will consider the act with the fund – “the National Security Account” – Wednesday.

Courtney said the ballistic-missile submarines built in the late 1950s and early 1960s, “41 for Freedom,” were paid for in a similar way. Both Blumenthal and Murphy said they supported including similar language in the Senate’s version of the bill.

In a conference room filled with EB employees, the three politicians thanked the group for delivering submarines on time and under budget, which they said helps them make the case for buying submarines. Rear Adm. Richard Breckenridge, the director of the Warfare Integration Division, represented the Navy at the event.

EB plans to hire about 550 people in the next year, primarily at its Quonset Point facility, where construction begins. In Groton, EB will hire employees to replace retirees and some new engineers, said Kurt A. Hesch, EB’s vice president for the Virginia program.

The number of employees in the trades in Groton will not grow significantly until the ballistic-missile submarines are under construction in the early 2020s. At that time, Hesch said, the number could double from 1,500 to about 3,000.

Breckenridge told the group of employees, “I just want to say, ‘Well done.’” The Navy, he said, is likely getting a “much bigger return on investment than any other defense dollar spent.”

“What you do matters so much,” he said, since their work “contributes directly to our national security in very profound ways.”

Courtney said, “At the end of the day, it was that confidence that people have in Washington about the work that you do, and obviously the strategic need that these submarines fill, that won the argument and prevailed. So congratulations, kudos to all of you and let’s keep it up.”

The Navy had planned to buy nine Virginia-class submarines until Congress directed the military to include 10 submarines in its next multi-year contract and said the Navy could pay for the parts and services for the submarines over a set number of years instead of having to fund the ships fully upfront. The contract does not cover the full $27 billion pricetag because the government also supplies equipment for the 10 submarines.

The contract was awarded to EB last week.

“It was a victory lap for them more than for us, because they’re the ones who established their credibility,” Blumenthal, D-Conn., said after the event.

“We work hard on this program but the ships sell themselves,” added Murphy, D-Conn.

Under the five-year agreement, EB’s Groton shipyard and Newport News Shipbuilding, the subcontractor, will jointly build two ships per year from fiscal 2014 to 2018. Hesch said EB will save money by buying parts in bulk for 10 submarines instead of nine, and the steady production rate will help prevent disrupting the workforce.

Blumenthal said, “This deal sounds too good to be true, but it is. The American taxpayer is getting 10 submarines for the price of nine.”

Murphy said the contract “sends a message across the world that the United States is not going to give up supremacy in the underwater space, that no matter how much money countries like China or Russia invest in their programs, we’re going to match it and exceed their investment.”

“I’m very proud to be part of this delegation,” he said. “This is not an easy moment to be fighting for these contracts.”

The group of submarines is collectively known as Block IV and construction of the first in the block, SSN 792, begins this month. The 10th ship is scheduled to be delivered in 2023. The previous $14 billion contract for eight submarines was signed in 2008.

New Virginia-class submarines cost about $2.7 billion each. EB currently employs about 12,000 people.

Kenneth DelaCruz, president of the Metal Trades Council, said that with the amount of work on the horizon, he feels hopeful.

“For us,” he said, “it’s our future.”