The Navy’s only manufacturer of nuclear reactors, BWX Technologies [BWXT], said if the Navy only procures one Virginia-class attack submarine in FY 2021 as requested, it could cause a financial hit to the company.

President, CEO & Director of BWX Technologies Rex Geveden said in quarterly earnings call with analysts that while there is a “long way to go on getting from a President’s budget request to an appropriated program” they are “extremely vigilant” on the Virginia issue.

The future USS Indiana (SSN-789), a Virginia-class submarine, is launched into the James River and moved to a submarine pier for final outfitting, testing, and certification. (Photo: Huntington Ingalls Industries)

“If that Virginia procurement turns into one for 2021 and coupled with some other delays, it certainly puts pressure on our three- to five-year scenario. But we have to go and evaluate exactly where we are if those two things happen,” Geveden said.

He noted there are other ways to help overcome those kinds of problems.

If the one Virginia-class submarine is what Congress appropriates, Geveden said it would start to impact the company in the government fiscal year, with impacts starting in late 2020 but really start hitting in 2021.

“I mean if you imagine that all the appropriations got done on time and the president signed off on the budget before the fiscal year began. I mean, theoretically, in Q4 of this year, it would start to taper in but in a minor way. The more significant impact starts in for us calendar year 2021. And then starts to peak out later two, three years later than that, because of the way the funding wedge goes on those nuclear ship sets,” Geveden said.

However, he noted a defense budget deal is unlikely to be finished on time, so the impact might be pushed back.

“In terms of whether or not we can get a budget deal, I’m just looking at history right. We never get a budget deal before October and certainly in an election year I cannot imagine a budget deal before the election being signed off by the president.”

However, Geveden underscored getting one Virginia submarine in FY 2021 would not have too large of an effect on capital expenditures (CapEx) planning.

“In terms of CapEx and capacity, it doesn’t really change that picture in any appreciable way. Because we would expect even if that occurs, we would expect the two Virginia tempo going forward. And when you think about is we’ve sort of laid out the math on the in the past, 12 Virginias at some state of completion going through the shop at any point in time a handful of Columbias as we get into the future.”

Geveden said between that long term planned Virginia and Columbia work, two to four Ford-class shipsets in the factories at any one time, “a Virginia on the margin doesn’t really change our production capacity picture or our capital picture.”

“I wouldn’t imagine that we would change our capital spending based on the possibility that that one Virginia scenario occurs in that one year,” he added.

December the service awarded General Dynamics’ Electric Boat [GD] a $22.2 billion contract for nine Block V Virginia-class submarines with an option for a 10th (Defense Daily, Dec. 2).

The Navy’s FY ’20 budget request is seeking $2.3 billion for one attack submarine and plans to request two per year from FY ’22-’25, which fits the nine-vessel contract. However, according to media reports, the Navy’s unfunded requirements list sent to Congress is requesting another $2.7 billion for a second FY ’21 attack submarine.

Earlier this month, several members of Congress hit the Navy’s FY ’21 request for budgeting too few ships, particularly attack submarines, as compared to previous plans for 2021 (Defense Daily, Feb. 12).

Then, last week, Rep. Joe Courtney (D-Conn.), chairman of the House Armed Services Seapower and Projection Forces Subcommittee, welcomed the Navy’s unfunded requirements request for a second FY ’21 Virginia-class submarine.

Courtney said that experts, combatant commanders and Navy leaders have told Congress about the growing need for submarines as potential adversaries like Russia and China increase their activities.

“They have urgently warned us that we need more submarine construction, not less, in order to mitigate the nearly 20 percent reduction in the fleet we presently face within this decade. That’s why we worked so hard to achieve and sustain the two-a-year build rate since 2011, and why deviating from that plan, as proposed in the budget, makes little strategic sense at this critical time,” Courtney said in a statement.

“Congress has demonstrated its strong and bipartisan commitment to this second 2021 submarine, having already provided more than $1.1 billion in advanced funding to support it. I welcome and appreciate the Navy’s clear request to Congress to support restoration of this submarine as we begin deliberations on the 2021 defense budget next week,” Courtney added.

The full House Armed Services Committee is set to grill the top Navy leaders on the FY ’21 budget request on Feb. 27.