Congress is pressing the Department of Defense to require multiyear shipbuilding contracts at Bath Iron Works more frequently, both to boost local manufacturing and promote military readiness as the U.S. faces increased maritime threats, particularly from China.

The U.S. Navy included multiyear contracts for Arleigh Burke-class destroyers as part of its 2023 fiscal year budget submission, which has been approved by the House and Senate. Each destroyer costs $2.2 billion, according to the Congressional Research Service, although not all of that money goes to the shipbuilder.

The budget also includes authority for a multiyear procurement contract for destroyers through fiscal 2027, which provides the Maine shipyard and other associated industries with “stability and predictability,” said U.S. Sen. Susan Collins, a Maine Republican who serves as vice chair of the Senate Appropriations Committee.

Collins and others want to see multiyear contracts become required.

“That’s the direction we’re pushing the Pentagon and Navy to go into,” she said in an interview with the Press Herald.

Collins cited battleship components such as weapons systems and radar made by small machine shops or large contractors that would benefit from multiyear contracts. With certainty from procurement that extends over several years, “you don’t have the situation where the machine shop closes up and you’ve got to find a new supplier, or the costs go sky-high because they weren’t sure whether or not there’s going to be continued business,” Collins said.

BIW was contracted in August to build three Flight III Arleigh Burke-class destroyers. Ingalls Shipbuilding in Mississippi has a contract to build six. Frederick J. Stefany, acting assistant secretary of the Navy for research, said in August that the Navy saved $830 million for the nine ships through multiyear procurement contracts.

Legislation signed by President Biden in mid-December authorized two Arleigh Burke-class destroyers at BIW next year, as well as a $780 million advance procurement for an additional destroyer to be purchased next year that the Maine shipyard can compete to build.

In November, BIW began work on its 45th Arleigh Burke destroyer. Its first was launched in 1989.

A spokesman for the Machinists Union Local S6, which represents more than 4,300 workers at Bath Iron Works, said the union would not comment on Pentagon funding.

PARENT COMPANY IS TOP FUNDING RECIPIENT

Defense spending authorized for BIW has big ripples in Maine’s economy. Last year, the shipyard spent more than $100 million on 280 Maine vendors, spokesman David Hench said.

Of the $3.6 billion in federal defense funding sent to Maine in fiscal year 2022, the greatest amount – $1.3 billion – went to General Dynamics Corp., BIW’s parent company, according to the Defense Department’s Office of Local Defense Community Cooperation. The next-largest amount was $418 million for 381 Constructors, a joint venture between Cianbro TIC and Middlesex Corp., which is building a dry dock project at Portsmouth Naval shipyard in Kittery.

Martin’s Point Health Care received $409 million in defense spending. The Portland health care provider in October received a 10-year government contract of about $6 billion to provide benefits for military retirees and family members of active-duty military. It’s one of six providers in the U.S. to administer the Uniformed Services Family Health Plan, in which it has participated since 1996.

“What a lot of people don’t realize is that defense contracts are important to communities and businesses throughout the state, from Biddeford to Aroostook County,” said Maine’s other U.S. senator, independent Angus King.

The National Defense Authorization Act specifies $886 billion in military spending next year, with another $3.6 billion headed to Maine, where the local defense industry builds destroyers, engine components for fighter jets and other equipment. Overall, military spending represents about 3.3% of the U.S. economy, down from an average 8% in the 1960s to 1980s, said King, a member of the Senate Armed Services Committee.

“At the same time, the threats and dangers have increased,” King said. “We’re building these weapons so they don’t have to be used. The cornerstone of our policy is deterrence. Aggressive actors … will act unless deterred by what they know to be superior force. Deterrence is a lot cheaper than war.”

China has been increasingly active in the South China Sea, insisting that disputed areas are its own and that Taiwan is a breakaway province, forcing the U.S. and its regional allies to prepare for possible military action if China were to try to take the island by force.

3 NAVY ALTERNATIVES

BIW could continue playing a big role in future efforts to expand the Navy’s battleship fleet.

Under three alternatives in the Navy’s 2023 plan, total shipbuilding costs would average about $30 billion to $33 billion a year through 2052, according to November 2022 estimates by the Congressional Budget Office, as the Navy builds a fleet of 316 to 367 battle force ships. Three alternatives in the Navy’s 2023 plan would require average annual shipbuilding appropriations that were 23% to 35% more than the average over the past five years.

Battle force ships include aircraft carriers, submarines, amphibious warfare ships, combat logistics ships, some support ships and other craft.

The Navy’s total budget would increase to $290 billion in 2052 from the current $220 billion. However, the fleet would be smaller over the next 10 years before increasing in size, the CBO said. If the Navy adheres to the schedule for purchases and ship retirements outlined in its 2023 plan, by 2052, the number of battle force ships would increase to 316 from 292, to 327 under another alternative, or to 367 in a third alternative, according to the CBO.

“One of our biggest considerations is the buildup of China’s fleet,” Collins said.

China is on track to have a 400-ship fleet by 2025, she said. Looking toward 2030, the Chinese fleet will grow in capability and size, numbering 430, or 50% larger than the U.S. fleet is projected to be in 2030.

“That’s very disturbing considering the increased role China is playing” in Asia and its “menacing threats to Taiwan,” Collins said.

Loren Thompson, a military analyst and chief operating officer with the Lexington Institute, said Russia is “flat on its back” due to its invasion of Ukraine and thus is unable to invest heavily in its military. The U.S. “makes China a centerpiece right now,” he said.

While the U.S. Navy must cover the world, China is confined to the western Pacific, he said.

“It’s rapidly outstripping our capabilities,” Thompson said. “We’re in danger of losing maritime dominance in the western Pacific.”

As a result, the western Pacific has become the “heartland” of domestic manufacturing, he said. China manufactures more goods than Europe, Japan and the U.S. combined,” he said.

To compete, Thompson said, lawmakers have repeatedly told the Pentagon, “tell the industry what it needs and stick to the plan.”

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