White House’s OMB skeptical of Navy plan to boost shipyard wages, SASC chairman says

USS Massachusetts (SSN-798), the 25th Virginia-class fast attack submarine. under construction at Newport News Shipyard in Virginia in 2022. (photo courtesy Huntington Ingalls Industries)

WASHINGTON — The White House’s Office of Management and Budget has yet to be convinced of the viability of a Navy plan that would boost shipyard wages and accelerate submarine production, the Senate Armed Services Committee chairman said.

During a fireside chat at the Reagan Institute’s National Security Innovation Base Summit on Wednesday, Sen. Roger Wicker, R-Miss., said he is engaged with the White House on the Shipyard Accountability and Workforce Support (SAWS) proposal, which he sees as a viable path to getting the shipbuilding industry the money it needs to raise salaries and make it more competitive for talent.

However, President Donald Trump’s OMB has not yet been sold on the idea, he said, adding that he believes OMB’s concerns are rooted in how the proposal stacks up in the office’s “scoring” process, which weighs a proposal’s cost against its benefits.

“To take on OMB, they really are the most powerful office in the government, and I learned that long ago,” Wicker said. “They’re very frustrating.”

In response, an OMB spokesperson told Breaking Defense of SAWS, “We agree with the big pay raise, and the money has already been sent. What we are not going to do is pay two or three times for the same thing. We are not going to turn the Gerald Ford carrier into a cost-plus contract.”

SAWS, proposed by the Navy last year, would rework certain contract mechanisms for how the Navy pays for submarine and aircraft carrier shipbuilders by essentially allowing prime contractors HII’s Newport News Shipbuilding and General Dynamics Electric Boat to shift long-term funding earlier in order to invest in raising wages in the short term. The ebb and flow of labor is always a challenge for the Navy’s prime shipyards, but the commitments the United States has made to the United Kingdom and Australia through the trilateral security pact AUKUS have intensified those pressures for Newport News and Electric Boat in particular.

However, the proposal previously came under fire from lawmakers in the fiscal 2025 defense policy bill, approved in December, which criticized the Navy for brokering the plan with industry and without input from either Congress or OMB.

Wicker, who took the SASC gavel in January, is supportive of the plan. He said the shipbuilding industry will not be able to meet the Navy’s demand for Virginia-class submarines unless it is willing to pay competitive wages to workers doing a “very difficult, physical job.”

“In Pascagoula, Mississippi, you can leave the shipyard and work at the Buc-ees 10 miles away and make as much money,” Wicker said. “It’s a lot easier to work at Buc-ees than welding or being an experienced 15- or 20-year expert in building ship after ship.”

Prior to Trump taking office, some shipbuilding companies were cautiously optimistic about how the new administration would receive SAWS, given the first Trump administration’s focus on shipbuilding.

“[SAWS] is an innovative approach that increase wages, accelerates submarine production [and] reduces the cost through the [future years],” HII CEO Chris Kastner told reporters in early January. “It really checks all the boxes relative to how you’d want to get boats under contract. So I think there is some — there could potentially be some more receptivity, because it’s a very innovative approach, and it solves a lot of challenges that we have right now.”

During an address to Congress Tuesday night, Trump announced the establishment of a new shipbuilding office inside the White House, which the president said would “offer special tax incentives” to industry with the intent of bolstering the shipbuilding industrial base. 

“This is a president who is finally putting his mouth and his and his advocacy of spending behind a 355 ship Navy,” Wicker said of the new office, adding that he had not been informed of its creation ahead of Trump’s speech.

Although Wicker expressed optimism overall for Trump’s willingness to back a defense spending hike through the reconciliation process, Congress stares down a March 14 deadline when government spending is set to expire, potentially complicating funding for the Pentagon.

Some top Republicans, including House Speaker Mike Johnson, are backing a full year continuing resolution (CR) that would keep funding at FY24 levels for the entirety of this fiscal year. Trump signed off on the a year-long stopgap during a meeting with Johnson and Senate Majority Leader John Thune last week, and the GOP intends to release the bill text this weekend, Politico reported Monday.

Wicker said he was “very pessimistic” about the prospect of a full year CR, stating it would lock the Trump administration into funding levels decided during the Biden administration and negatively impact new defense programs.