Navy Secy: DoD Shouldn't Buy Ships To Subsidize Shipyards

Dow Jones 03/03/05
author: Rebecca Christie

WASHINGTON -- The Defense Department shouldn't buy ships strictly to shore up the shipbuilding industry, Navy Secretary Gordon England said Thursday, renewing the Navy's desire to eliminate either Northrop Grumman Corp. (NOC) or General Dynamics Corp. (GD) from the Navy's DD(X) destroyer program.

The Navy has recommended that the Defense Department hold a new competition for only one contractor to build the ships, instead of the current two-company plan. The Bush administration's current budget calls for building only five of the ships in the next six years, a four-ship cut from previous plans.

England said the Navy would have to pay an extra $300 million per ship if it doesn't restructure the program in response to current shipbuilding plans. But maintaining two shipyards to build one ship a year would be "very, very costly" to the Navy, he said.