The Navy says it is moving to renegotiate a contract for long-lead materials for a Virginia-class submarine planned for fiscal 2014 to cope with automatic budget cuts that took effect on Friday.
Navy Secretary Ray Mabus said the decision to renegotiate contract modifications was an immediate response to the automatic budget cuts known as sequestration, and that other steps will have to be taken across the Navy to deal with the impact of sequestration and the possibility of a continuing resolution (CR) to govern spending for the rest of the fiscal year.
President Barack Obama signed the sequestration order required under the Budget Control Act of 2011 late Friday after the White House and congressional Democrats and Republicans failed to reach a budget agreement.
“Because no budget deal had been reached, the Budget Control Act required setting in motion the automatic, government-wide cuts known as sequestration,” Mabus said in a memo issued over the weekend. “Given that reality and the association impact of budget uncertainty imposed by an indefinite continuing resolution, the Department of the Navy intends to commence some reductions immediately.”
The Navy allotted $874 million in fiscal 2013 for long lead items for the 19th Virginia-class (SSN-774) attack submarine. Of that, more than 90 percent, or $849 million, has been obligated, a spokeswoman said. The Navy is looking to “de-obligate” the remaining amount under Mabus’ instructions.
General Dynamics [GD] Electric Boat and Huntington Ingalls Industries [HII] are the makers of the Virginia-class subs.
Long-lead materials are generally items that take lengthy amounts to time to produce and can include the nuclear power plant.
Mabus said the Joint High Speed Vessel (JHSV) program, built by Austal USA, will be affected under his order.