Senators decry Navy decision on destroyers
By Ross Kerber and Bryan Bender
Globe Staff / July 25, 2008
WASHINGTON - A coalition of US Senators yesterday launched a counteroffensive against the Navy's decision to scrap a $20 billion destroyer program that was to deliver huge contracts to Raytheon Co. of Waltham and Bath Iron Works in Maine.
Led by Senator Edward M. Kennedy, the dozen senators from Massachusetts, Maine, and elsewhere threatened to hold up other shipbuilding funds if the Navy doesn't provide more explanation for why it won't buy more of the DDG-1000 Zumwalt class of ships after the first two are finished around 2014.
"A shift of this magnitude in the Navy's shipbuilding plan requires a full review and analysis through the proper departmental channels and processes, including congressional oversight," the lawmakers wrote in a letter to Defense Secretary Robert M. Gates.
"To do otherwise would undermine the Navy's shipbuilding plan in Congress and could result in the Congress providing no funding for new surface combatants in" fiscal year 2009, wrote the letter's authors, who also included Senators John F. Kerry of Massachusetts, Olympia J. Snow and Susan M. Collins of Maine, Jack Reed of Rhode Island, and Byron Dorgan of North Dakota.
The Navy yesterday confirmed it is cutting off the DDG-1000 on the grounds that an older, more traditional destroyer they aim to produce in greater numbers has more fighting and defense capabilities.
Lawmakers have said Navy officials informed them the Zumwalt-class ship had gotten too expensive and would hinder the service's goal of expanding the naval fleet to 313 ships.
The Navy pegs the first two DDG-1000 ships at $3.2 billion each, and subsequent ships at $2.2 billion each. But the Congressional Budget Office this month predicted the first two would cost $5 billion apiece, with others costing $3.6 billion. Congress has so far not authorized funding beyond two.
Raytheon is the prime contractor to supply the ships' combat systems. One of the two is to be built at General Dynamics' shipyard in Bath, Maine, and the other at a Northrop Grumman Corp. shipyard in Mississippi.
Once known as the "DD-X" design, the Zumwalt class is known for its low-profile, radar-evading hull. The ships are packed with advanced electronics that allow them to be operated by a crew of 142, far fewer than for traditional destroyers, though they carry a similar armament of missiles and guns.
The Navy also yesterday confirmed it would instead seek to build more of an older type of destroyer known as the DDG-51 Burke class, starting in fiscal year 2010. In a statement, Navy spokesman Lieutenant Clay Doss said the Burke design "is a proven multimission ship" that meets the service's needs in areas like missile defense and submarine-hunting.
Officials at both Raytheon and General Dynamics have said the Navy has yet to inform them of its decision.
Maine lawmakers are hopeful the Bath shipyard will get the bulk of the work building the eight new Burke-class ships. However, the current editions of those vessels have combat systems made by Raytheon competitor Lockheed Martin.
The Navy has already committed an estimated $11 billion to the Zumwalt program. Though it has not disclosed its total contracts from the program, Raytheon has previously said it received a $3 billion development contract and a nearly $1 billion production contract for it.
The Zumwalt work is Raytheon's largest defense program and represents 3 to 4 percent of earnings, chief executive Bill Swanson said on a conference call with analysts and investors yesterday.
But for Raytheon it is just one of 8,000 projects, and Swanson noted many of the systems designed for the Zumwalt could also be used in other Navy ships such as the forthcoming USS Gerald R. Ford aircraft carrier.
"It is not like things are being thrown away here. It is not a doom and gloom scenario by any means," Swanson said.
Wall Street seemed to agree: Shares in Raytheon fell 61 cents to close at $56.85 in trading yesterday, down 1.1 percent. Shares in General Dynamics fell $2.21 to close at $87.06, down 2.5 percent.
With Congress previously unwilling to fund a third Zumwalt-class ship, the New England lawmakers may face a difficult task trying to salvage the program. Lawmakers outside New England cited the Zumwalt's burgeoning costs as a reason to back the Navy's decision to instead build the DDG-51 destroyers.
Ike Skelton, the Missouri Democrat who chairs the House Armed Services Committee, said in a statement he was "pleased with the Navy's decision to focus its resources on the DDG-51 destroyer, with its known costs and capabilities, rather than the increasingly expensive DDG-1000."
His committee had previously suggested the Navy make the switch after finding that proceeding with the Zumwalt program "would cripple the Navy's plan to reach a 313-ship fleet." At a hearing in March, Mississippi Democrat Gene Taylor called the 313-ship plan "pure fantasy" based on current spending plans.
