American Shipbuilding Association

House and Senate Committees Authorize Nine Ships in FY 05

Before adjourning for Memorial Day recess, the House and Senate Armed Services Committees completed work on their respective Defense Authorization Bills for FY 2005.  Both Committees authorized appropriations for nine ships, in parity with the President’s budget request.

With a few exceptions, both Committees fully funded the Administration’s request.  The biggest set-back came from the House Armed Services Committee that cut $211 million from the DD(X) program.  Full funding of DD(X) is crucial.  Without it, the year and half gap in construction of multi-mission surface combatants -- as DDG-51 production is terminated leading to final design and construction of the first DD(X) in mid ’07-- will grow into a multi-year production gap and devastate the shipbuilding industrial base, with thousands of job losses and company closures throughout the Nation. 

On the positive side, both Committees funded three DDG-51 Arleigh Burke destroyers, one Virginia-class submarine, one LPD-17 San Antonio-class amphibious transport dock ships, and two T-AKE auxiliary cargo and ammunition ships.  The House added $100 million for the DDG-51 modernization program.  The Senate added $100 million to the budget request for the DD(X).  Both the House and Senate added $150 million in incremental funding for the amphibious assault ship replacement program – LHA(R).  The House cut funding for the Littoral Combat Ship (LCS) by $108 million.    

Nine ships is one of the more positive shipbuilding budgets in years.  However, the 295 ship Navy cannot be sustained, or rebuilt with anything fewer than 12-15 ships per year. 

Moreover, both Committees completed work on their bills on the heels of an internal DOD report that indicated the Navy is considering cutting the U.S. attack submarine fleet by a third.  In a article that appeared in the Boston Globe on May 12th, it was reported that Navy budget office has proposed cutting the submarine fleet from 55 vessels to 37.  The proposed cut is one proposed option to curb the budget requirements.   

This report is yet another in the long line of reports that seek to “study away” the requirement for increased numbers of naval ships.  Most of the studies that have been performed call for a Navy of a size much larger than the Navy that presently exists – one which past and present budgets do not support.  Some of the studies include: 

• The 2000 SECDEF report to Congress called for a 360-ship Navy built around 15 CVNS
• The 2001 Joint Chiefs of Staff Submarine Force Structure Study called for 78 Attack Submarines
• The 2001 Navy Surface Combatant Force Structure Study called for 135 multi-mission Surface Combatants
• The Navy’s input to DOD for the 2001 Quadrennial Defense Review called for a 360-400 ship Navy
• The Marine Corps long standing 3 MEB Lift Requirement calls for 15 Expeditionary Ready Groups
• The Navy’s 2003 Report to Congress called for a 375-ship Navy

The requirement is there; the budgets, however, do not satisfy the requirement.  The goal of the Department of Defense seems to be to continue to issue study after study until they arrive at a fleet number that matches their budget – rather than the requirement driving the budget. 

Rep. Jo Ann Davis Wins a Victory for U.S. Shipbuilding

In a victory for the defense shipbuilding industry, Representative Jo Ann Davis (R-VA) garnered overwhelming bipartisan support for an amendment to the Department of Defense Authorization Bill limiting leases of foreign-built ships to no more then one year.  Her amendment, co-sponsored by Rep. Gene Taylor (D-MS), was adopted by the House Armed Services Committee on May 12th. 

In 1990, Congress enacted the Budget Enforcement Act to curb the practice of leasing capital assets because of budget analyses proving that leasing is more expensive to the taxpayer than buying a capital asset for which a long-term military requirement exists. 

DOD, however, has been leasing foreign-built ships for 59 months, and then re-leasing the same ship for another 59 months to meet military unique long-term mission requirements.  By using a lease contract one month shy of five years, DOD is not required to request funding authority for the entire cost of the lease in the first year, as required by the Office of Management and Budget regulations accompanying the Budget Enforcement Act. 

U.S. law also requires that ships purchased for all branches of the military be built in the United States. 

“Congresswoman Jo Ann Davis stood up for the industry and the security of our Nation with her amendment,” said Cynthia Brown, President of the American Shipbuilding Association.  “The Department of Defense practice has been to evade the Budget Enforcement Act and U.S. acquisition laws by “purchasing”, via long-term leases…foreign-built ships to the detriment of America’s defense industrial base.” 

The defense shipbuilding industry has lost more than 180,000 highly skilled engineers and crafts people over the last decade, and is faced with the potential loss of another 78,000 jobs over the next five years. 

Twenty-four Members of Congress, twenty-three of whom serve on the House Armed Service Committee signed a letter in support of Rep. Davis’s amendment to limit the long-term leasing of foreign-built ships.  Those Members include:  Reps. Jo Ann Davis (R-VA), Gene Taylor (D-MS), Neil Abercrombie (D-HI), Madeleine Bordallo (D-GU), Jeb Bradley (R-NH), Robert Brady (D-PA), Susan Davis (D-CA), Lane Evans (D-IL), Randy Forbes (R-VA), John Hostettler (R-IN), Steve Israel (D-NY), Walter Jones (R-NC), Jim Langevin (D-RI), Rick Larsen (D-WA), John Larson (D-CT), Frank LoBiondo (R-NJ), Mike McIntyre (D-SC), Candice Miller (R-MI), Bobby Scott (D-VA), Rob Simmons (R-CT), John Spratt (D-SC),  Jim Turner (D-TX), Curt Weldon (R-PA), and Joe Wilson (R-SC).

The American Shipbuilding Association appreciates the leadership of Rep. Davis and all of the Members who voted in favor of her Amendment. 

Presidential Candidate John Kerry Weighs in on Sea Power

In response to a Sea Power Ambassador letter sent to presidential candidate John Kerry on the need to rebuild our Navy, the following commitment was received: 

Thank you for writing to [me] about the U.S. naval fleet. [I] share your concern about maintaining a robust Navy that is second to none.  As a U.S. Naval veteran [I] know first hand the importance of sea power and projecting American might around the world.

As president, [I] will be committed to building and maintaining the greatest Navy in the world.  That means making critical investments in our fleet and crews.  We must take full advantage of transformational technologies and techniques to ensure the United States remains the world's premier maritime power.  

[I] support fully funding Navy research and development programs that enable us to deploy the most technologically sophisticated Navy possible, manned by the most highly-skilled sailors in the world.

No response has yet been received from the George W. Bush campaign on the need to rebuild our Navy. 

Alfa-Laval & Marotta Controls Join ASA

ASA welcomes Alfa-Laval and Marotta Controls as new Partner members.  Alfa-Laval is a leading manufacturer of heat exchangers and fluid handling equipment for the U.S. Navy and marine industry.  The company is located in Richmond, Virginia, and has offices across the U.S. 

Marotta Controls, headquartered in Montville, New Jersey, produces high-pressure air reducing manifolds, regulators, and fuel control valves for our Nation’s naval fleet.  The company is also involved in developing and incorporating new “smart technologies” in valves for future systems of the Navy. 

Industry News

Construction Begins on First T-AKE

National Steel and Shipbuilding Company (NASSCO) in San Diego, California has begun construction on the first ship in the T-AKE program.  Designated the Lewis and Clark class, the T-AKE is the first new combat logistic force ship designed for the Navy in almost 20 years.  The Navy has awarded NASSCO contracts for six of these dry cargo/ammunition ships, with options for an additional six ships.  If all options are exercised, the 12-ship program would become the largest contract in NASSCO’s history.   

Delivery of the first ship, the Lewis and Clark, is scheduled for 2005. 

$1.386 Billion Awarded for CVN-21

Newport News Shipbuilding in Newport News, Virginia, has been awarded a $1.386 billion construction preparation contract for work on the next generation of nuclear aircraft carriers -- CVN-21.  In addition to providing for the continued design of the ship’s propulsion plant, the contract allows for the purchase of long lead materials and continued R&D with key suppliers.  Construction of CVN-21 is expected to begin in 2007.

Well Said!

“Like many, if not all of you, I believe that America needs our industry.  If not us, who will build our ships…?  Will foreign nations build our warships?  How much industry can we loose before we become a dependent Nation?  Let’s do something for ourselves and for our Nation.  Let’s restate our collective importance to our economy and, at the same time, develop the lifetime careers for the young men and women of this Nation.”

George Yount

Vice-President, NGSS – Avondale Operation Chairman of the Board, American Shipbuilding AssociationSpeech Before Propeller Club May 3, 2004