Procurement: October 1, 2003

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The U.S. Navy wants to buy its new nuclear subs in bunches, in a contract that will cover up to five Virginia class subs at once. Normally, the building of these subs is authorized by Congress one at a time, at a cost of $2.2 billion each. But if the navy could give the builders a multi-boat deal, costs would be cut significantly (about $155 million per sub.) The savings result from being able to order more of some items, and over a longer period of time at fixed prices. The thousands of suppliers involved have to charge more for short term contracts because they know they might be stuck with unused capacity after the current contract is completed. But Congress is reluctant to go along with this cost saving plan because the year-by-year spending gives Congress more control over the process. Defense spending is political power, and can be turned into votes. The balance of power shifts in large, and small, ways in Congress each year, and a multi-year buy of these subs makes it difficult to get some of the spending shifted to another Congress members district or Senators state. One way an incumbent stays in office (and most do) is to "bring home the pork". This means getting government spending placed where it will generate some additional votes for the next election. All perfectly legal, all widely known in Washington, and all very expensive when you are building major weapons systems. But the high costs of the wars in Iraq and Afghanistan have forced Congress to actually allow the Navy to contract for five Virginia class subs at once. This may well be a one time deal, as there are too many political reasons for doing the purchasing the more "politically correct" way.

 


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