The Pentagon is considering whether to cancel construction of one of the next-generation destroyers being built at Bath Iron Works, a move that would imperil jobs at Maine’s fifth-largest private employer.

Several reports said the Defense Department is trying to decide whether to complete construction of the USS Lyndon B. Johnson, the last of three Zumwalt-class destroyers, even though the vessel already is more than 40 percent complete.

It’s a topic “to be reviewed in the next few weeks” by teams formed by the Pentagon’s independent cost-assessment office, according to a report by Bloomberg News that cited an Aug. 25 Defense Department briefing document. Two officials familiar with the issue told Bloomberg that the possibility of scuttling the ship’s construction arose during planning for the fiscal 2017 budget.

The three Zumwalts are part of a $22 billion program at General Dynamics’ BIW shipyard, which employs more than 5,000 workers and has an annual payroll of $360 million.

A cancellation also could affect a multitude of businesses that support the yard, or operate within its supply chain. BIW spent $64 million with 345 companies located in 12 of Maine’s 16 counties in 2014. The bulk of that money – $40 million – flows to small businesses, according to figures provided by the company.

Jay Wadleigh, president of Local S6 of the Industrial Union of Marine and Shipbuilding Workers of America, said there would be “a lot of work lost” if the Navy reneges on the third Zumwalt, but because of concurrent work on other ships in the yard it is impossible to predict how much.

Defense analyst Loren Thompson told The Associated Press that talk of scuttling the third Zumwalt destroyer is a result of the 2011 budget deficit reduction law, which continues to squeeze the Navy’s shipbuilding budget.

“This is not so much a reflection of the ship’s value as it is the shortage of funding for shipbuilding,” said Thompson, who works for the Lexington Institute, a public-policy think tank in Arlington, Virginia. “This has actually been under consideration for a while now.”

BIW spokesman Matt Wickenheiser said he would not comment on the reports.

QUESTIONING POTENTIAL SAVINGS

The Zumwalt-class was designed as the Navy’s next-generation destroyer, a stealth vessel that can fire missiles on targets more than 70 miles inland. But from an initial order of 32 ships, the number of Zumwalt vessels the Navy planned to build has been reduced over the years to seven and then to three, reflecting increasing costs and a change in what the Navy predicts it will need in a future force.

Officials with the Congressional Research Service told Bloomberg that the procurement cost for all three Zumwalt vessels has increased by an estimated 37 percent since 2009, to $12.3 billion. The estimated construction cost for the third destroyer, designated DDG-1002, is about $3.5 billion. A key question is how much of that could be saved by canceling a ship that’s about 41 percent built, according to the officials, who asked not to be identified in discussing internal deliberations.

Employees at the Bath shipyard were taken by surprise by the news Monday, Wadleigh said. The union represents about 3,400 of BIW’s more than 5,700 employees.

“It seems to me it’d be a huge waste of taxpayer dollars,” he said in an interview Monday afternoon.

The number of jobs that would be at stake is impossible to determine because so much of the work overlaps with what’s being done on the other destroyers under construction, Wadleigh said. Hypothetically, if the Pentagon canceled the third Zumwalt, the shipyard could potentially accelerate work on the five other destroyers under construction in the yard – two other Zumwalts and three DDG 51-class destroyers – to keep people working. But that would be a short-term fix, he said.

“Ultimately, there’s a lot of work being lost because even if the company was able to fill the gap and avoid layoffs, we’d get hit on the back end,” he said.

The program enjoys the support of some powerful allies in Congress, including Maine’s two senators. Sen. Angus King is a member of the Senate Armed Services Committee and Sen. Susan Collins heads a Senate Appropriations subcommittee and serves on its defense panel.

They reacted to Monday’s news with dismay.

“If Pentagon officials are contemplating the cancellation of this ship at the eleventh hour and when it is already more than 40 percent complete, it would be a policy and financial mistake that would weaken the Navy’s fleet, degrade the manufacturing industrial base upon which our country’s security depends, and would not save money at this stage due to cancellation and other contractual fees,” the senators said in a joint statement.

They said there are always challenges with developing a “first-of-its-class weapons system.”

“Just last week, Secretary of the Navy Ray Mabus said the Navy is committed to all three ships because of the capabilities they will bring to the fleet, and we take him at his word,” King and Collins said.

The senators were referring to comments by Mabus included in a Politico article published Sept. 7 in which he confirmed the Navy’s commitment to building all three Zumwalts in Bath.

“If you were going to make a decision to not have all three, that decision should have been made a long time ago,” Mabus told Politico. “Now, it’s probably as expensive to cancel as it is to build it, just because of the way the contract is written and the way the material is bought, the infrastructure put in – that sort of stuff.”

STRAINED BIW, NAVY RELATIONS

U.S. Rep. Chellie Pingree, who represents Bath as part of Maine’s 1st Congressional District, said canceling the third Zumwalt would make no sense.

“The first ship in a new class is always the most expensive and then the cost goes down as more are built, so canceling the third ship would actually be canceling the one that is the most cost-effective,” she said in a written statement. “In addition, the fact that it’s already under construction means pulling the plug now would be a total waste of taxpayer dollars.”

Wadleigh agreed with Pingree. He said BIW employees working on the third Zumwalt report that everything is running smoother than it did on the first two.

“The design quirks and the other issues have been worked out and the performance seems to be better,” he said.

Asked by Bloomberg about discussions of a potential cancellation, Cmdr. Thurraya Kent, a Navy spokeswoman, said, “It would be inappropriate to discuss business-sensitive information or speculate on budget deliberations.”

The ship was reviewed last month as part of a regularly scheduled meeting, and “the internal discussions of this meeting are not publicly releasable,” Kent said in an email.

Lucy Ryan, a General Dynamics spokeswoman, told Bloomberg in an email, “We’re not going to speculate” on any future Navy budget action. “This decision is entirely up to the Navy.”

The Navy is reviewing a BIW proposal to adjust target costs for the second and third vessels in the class, with an updated proposal planned for December, according to a Navy program update last month, Bloomberg reported.

Separately, the Navy said delivery of the first vessel will slip beyond November, which already was 14 months later than originally scheduled. Kent told the news service that contractor-sponsored dockside tests would start in November, followed in December by sea trials. Rear Adm. Jim Downey, program manager for the ships, estimates the new delivery date for the first Zumwalt will be closer to May 2016.

In an assessment for the Aug. 25 review, Downey wrote that although most management issues with the contractor “are on track,” a pending BIW “request for equitable adjustment” for reimbursement of some design, construction and support costs “has strained BIW and Navy management relations,” Bloomberg reported.

The Navy also “continues to witness strained relations between BIW and the labor unions in the shipyard,” Downey wrote.

The union and management are disputing job classifications and outsourcing, issues stemming from a desire by BIW President Fred Harris to lower costs so the yard can compete for other vessels, especially Coast Guard cutters. Eleven of the cutters are going out to bid, a contract potentially worth $10 billion, in early 2016.

Wadleigh, at Local S6, said the relationship between the union and the company is improving. He said the company has hired the Gephardt Group, an Atlanta-based labor-related consulting firm led by former U.S. Rep. Dick Gephardt, to act as a mediator between the parties and help them find common ground.

“The fact they’re in here I see as a positive sign,” Wadleigh said.