WASHINGTON, May 10 (UPI) -- Northrop Grumman's top shipbuilding executive Tuesday defended a request for extra payments for ship repairs.
The emergency supplemental appropriations were requested at the firm's Gulf Coast yards damaged by Hurricane Katrina, arguing that failure to do so would have serious repercussions for several Navy projects, CongressDaily reported.
If Congress does not appropriate the money, ship production could be delayed as long as a year, potentially driving up costs by as much as $500 million, Philip Teel, president of Northrop Grumman's Ship Systems business, told reporters at a news conference.
The company's three Mississippi and Louisiana yards have under construction 12 ships from five different naval classes, including the DDG 1000, formerly known as the DD(X) next-generation destroyer, and the LPD-17 amphibious transport dock ship, CongressDaily said.
The company estimates the storm caused $2.35 billion in ship and infrastructure damages at its Gulf Coast facilities. Of that, Northrop Grumman would like to tap $200 million out of up to $2.7 billion in appropriated funds for the Navy for Katrina-related damage, depending on the outcome of current House and Senate conference negotiations.
But critics say the money amounts to corporate welfare and a bailout for one of the country's top defense contractors that could ultimately reach $500 million. Teel, who took over the ship business last year, said costs would not top $200 million, and may be as low as $140 million. The money would only cover repairs to damaged ships, which the firm regards as government property, he said.
House appropriators, the White House and the Navy have opposed any direct subsidy to Northrop Grumman, the report said.
