OMB Hesitates on Navy’s Shipyard Wage Plan
The White House’s Office of Management and Budget (OMB) remains unconvinced about the Navy’s plan to increase shipyard wages and accelerate submarine production, according to Senate Armed Services Committee Chairman Roger Wicker (R-Miss.). Wicker, speaking at the Reagan Institute’s National Security Innovation Base Summit, confirmed his ongoing efforts to secure White House approval for the Shipyard Accountability and Workforce Support (SAWS) proposal. He believes the plan offers a viable solution to fund salary increases and enhance the shipbuilding industry’s competitiveness in attracting talent. However, the OMB’s reservations appear to stem from the proposal’s performance in its internal cost-benefit „scoring” process. Wicker expressed his frustration with the OMB’s power and influence.
OMB’s Response: No Double-Dipping
In response, an OMB spokesperson stated that while they support significant pay raises (and funding has already been allocated), they oppose paying twice or thrice for the same thing, citing concerns about transforming the Gerald Ford carrier contract into a cost-plus arrangement.
SAWS: A Controversial Proposal
The Navy’s SAWS proposal, introduced last year, aims to restructure contract mechanisms for submarine and aircraft carrier builders. It would allow prime contractors HII’s Newport News Shipbuilding and General Dynamics Electric Boat to access long-term funding earlier, enabling immediate investments in wage increases. While labor fluctuations are a constant challenge for Navy shipyards, the AUKUS pact has intensified pressure on Newport News and Electric Boat, making this issue even more critical. The proposal previously faced criticism from lawmakers in the fiscal 2025 defense policy bill for lacking Congressional and OMB input during its development.
Wicker’s Support: Competitive Wages Essential
Senator Wicker, supportive of SAWS, argues that competitive wages are essential for the shipbuilding industry to meet the Navy’s demand for Virginia-class submarines, given the demanding nature of the work. He highlighted the wage disparity between shipyard jobs and other readily available positions, using the example of Buc-ees convenience stores offering comparable salaries with less demanding work.
Initial Industry Optimism and Trump’s New Shipbuilding Office
Before President Trump’s administration, some shipbuilding companies expressed cautious optimism about SAWS’ reception, given the prior administration’s focus on shipbuilding. HII CEO Chris Kastner described SAWS as an innovative approach addressing various challenges. President Trump’s recent announcement of a new White House shipbuilding office, offering tax incentives to bolster the industrial base, further fueled hopes for increased funding. Senator Wicker expressed optimism about Trump’s commitment to a larger Navy but noted he was unaware of the new office’s creation before its announcement.
Funding Concerns and the March 14 Deadline
Despite Wicker’s overall optimism regarding Trump’s defense spending support, the looming March 14 government spending deadline poses a significant challenge. The prospect of a full-year continuing resolution (CR), keeping funding at FY24 levels, concerns Wicker, who believes it would negatively impact new defense programs and lock in funding decisions made during the Biden administration. He expressed pessimism about the likelihood of a full-year CR.
