Navy Department could face $10 billion in budget cuts

The Navy could be forced to slash its annual budget by $10 billion as the Pentagon pares its spending, defense insiders tell The Hill.

White House officials have ordered the Pentagon to begin slashing its budget starting in 2013 to meet President Obama’s goal of $400 billion in national security cuts.

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Pentagon and Navy Department officials have yet to make final decisions about how much the department (which includes the Navy and Marine Corps) will trim from its annual budget, or about what to truncate or eliminate.

But multiple industry sources with ties to the department said it has been told to expect a $10 billion funding cut for 2013. And department officials are seriously mulling options that would alter shipbuilding plans and naval operations for years, according to those sources and lawmakers.

“The Navy is anticipating a $10 billion cut to its fiscal 2013 budget request that will necessitate major program changes,” said Loren Thompson, a defense industry insider and chief operating officer of the nonprofit Lexington Institute think tank.

“That’s what I’m hearing,” another Navy insider said when asked about the $10 billion amount.

The Navy Department requested $161.4 billion in baseline funding for 2012. The House-passed 2012 defense appropriations bill proposed a $1.7 billion cut to department procurement accounts.

With the department facing a possible cut approaching $12 billion, weapons program cuts are on the table.

“One option under active consideration for most of the year has been to delay construction of the second aircraft carrier in the Ford class from 2013 to 2015,” Thompson said.

Rep. Randy Forbes (R-Va.), chairman of the House Armed Services subcommittee on Readiness, said the Navy Department also was considering removing another aircraft carrier from its long-term shipbuilding plan. 

That won’t sit well with lawmakers from districts and states that are home to U.S. carriers and their related industries. The so-called shipbuilding caucus would no doubt make a lot of noise if such plans were included in the department’s 2013 budget plan.

Two senior Navy officials testifying at the session did not directly respond to Forbes’s questions about either alleged change in aircraft carrier plans. 

The carrier moves, if enacted, would “severely impact” defense firms that build the big warships and their many subcontractors and parts suppliers, Thompson said. 

But, he added, because aircraft carriers are so expensive, delaying one and canceling another also would “save significant funding in the near term.”

How much savings? Tens of billions of dollars.

The second Ford class carrier is projected to come with a $10.3 billion price tag, with the third carrier in that class expected to cost $13.5 billion, according to the Congressional Research Service.

The Navy Department has been in cost-cutting mode for months.

Secretary of the Navy Ray Mabus told reporters during an April breakfast that officials had been eliminating ships deemed too costly and working with Pentagon leaders and industry executives to drive down the costs of ones they will buy.

Mabus said the department must be more “realistic” about how much ships should cost, and how much shipbuilding funding Congress will approve.

As Obama administration officials and Congress look for ways to trim the Pentagon budget, defense insiders expect a fight over shipbuilding.

The coming battle was previewed last week during a House Budget Committee hearing when differing views about Navy spending needs were offered by former Sen. Jim Talent (R-Mo.) and Gordon Adams, who oversaw national security budgeting for the Clinton administration.

On one hand, Talent called for sustained or bigger annual Navy budgets, due largely to the fact that ships were being retired because the cost to maintain them was being deemed too steep.

On the other hand, Adams said a well-managed defense “build-down” would still leave the U.S. with the most capable naval fleet — as well as ground and air forces — in the world.