The Navy’s only manufacturer of nuclear reactors, BWX Technologies, said Tuesday that the service’s plans to procure just one Virginia-class attack submarine in fiscal 2021 could hit the company’s bottom line.
BWXT President and CEO Rex Geveden said in the 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,” the company is “extremely vigilant” on the Virginia issue.
“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.
The Navy had planned to procure two of the attack subs in the budget year beginning Oct. 1. But that was reportedly halved to shift funds for the Department of Energy’s National Nuclear Security Administration (NNSA). The civilian nuclear-weapon steward is requesting a spending boost from $16.7 billion this year to $19.8 billion in fiscal 2021.
If Congress appropriates money for just one Virginia-class submarine, Geveden said it would start to impact the company in the government fiscal year, starting in late 2020 but really 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.”
