The announcement of a two-carrier block purchase at the Newport News shipyard means a boost to the Hampton Roads economy and continued federal defense spending in Virginia. The purchase is part of the Navy’s FY 2019 Shipbuilding Plan to expand the fleet to 355 battle force ships over the next 30 years. Making the block purchase is estimated to save taxpayers up to $4 billion due to more efficient acquisition approaches and is the first such purchase since 1988.
Virginia continues to lead the nation both as the No. 1 state recipient Department of Defense (DoD) spending and the state with the largest share of defense spending as a share of state Gross Domestic Product. The Commonwealth hosts 27 military bases and direct, indirect, and induced defense spending accounts for several hundred thousand jobs. Though this has been a boon to Virginia’s economy, communities that are highly dependent on defense spending should continue to investigate diversification of their economies to avoid negative impacts in the event of any defense spending drawdowns, as was the case with the budget sequestration of 2013.
In June 2018, Governor Ralph Northam announced an update of the Virginia DoD Contract Spending Impact tool. This website provides useful data on the current and projected impacts of DoD contract spending at the state and local level. Localities with the highest level of DoD contract dependence are primarily concentrated in Northern Virginia and Hampton Roads, but the impact of defense spending can be felt statewide.
VACo Contact: Jeremy R. Bennett