Thursday, February 28, 2008

Funding Submarnies The Smart Way

Lawmakers from Connecticut and Rhode Island are getting out front of the FY09 budget to protect last years funding for moving up the date to build 2 Virginia class submarines a year. If this is right, we like the approach.

In addition to protecting current funding, submarine backers are seeking more money as Congress crafts a new defense spending bill for fiscal year 2009.

Submarine supporters want $79 million in new funding to speed up construction on a second sub. They're also seeking an additional $53 million for design work on next-generation submarines.

While the number of SSNs matters a lot, what is very important is R&D and sustainment of the design base for submarines, and we like that the lawmakers are looking for money in that area. As we have observed with the Virginia class, investment of millions in the submarine design base can save billions in submarine construction costs, and in effect that is exactly what we are seeing with the Virginia Block III. For example, the roughly 200 million spent the last decade on submarine R&D will result in savings of between $4-5 billion for the first 7 years of two submarine annual construction rates.

Not only are the Block III Virginia class submarines less expensive, but they are more capable. In our opinion, R&D in shipbuilding is an excellent investment, not only for Congress and the Industry, but also for the Navy.

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