Canceled defense contracts on horizon

PORTSMOUTH, Va. (WAVY) - Shipyards in Hampton Roads are bracing for drastic cuts, which could send shock waves through the area's economy.

The Navy announced plans last month to scale back ship repair work in private yards while the budget battles continue in Washington, D.C. Congressman Randy Forbes (R-VA), who chairs the House Sea Power Subcomittee was in Hampton Roads touring area shipyards, proving this is a critical time for national defense.

"You'll have a couple of people, possibly within the next week or so, getting 'Warn Act notices' that their jobs could be potentially impacted [by the cuts]," Forbes said. "Secondly, you could have some people possibly lose their jobs."

Forbes said some second-tier contractors may fold, hurting not just the economy, but the Navy's ability to maintain a ready fleet.

"They could go out of business and not be available to actually do the kind of work that we need to do ... down the road," Forbes said.

A lot of that repair work is based on prearranged contracts that will be canceled, if necessary. The move could cost the federal government a lot of money. 

"If we can't operate on a multi-year basis, we lost on one contract alone about $3 billion of tax payer funds," Sen. Mark Warner (D-VA) said.

Warner said there is room for compromise on the budget and the GOP's demands to cut spending.

"From the Democratic side, [it means looking] at how we make the entitlement programs sustainable over the next 30 years," Warner said.

Warner said his Democratic colleagues in the Senate need to look at changes to social security and Medicare now that people are living longer lives.

"I don't care what they look at, we need them to actually pass the budget and a bill," Forbes said.

If a budget isn't settled upon to prevent sequestration, the results will be catastrophic not only to Hampton Roads, but to the nation as a whole.