American Shipbuilding Association

Sea Power Forum, Mark Your Calendar!

The next American Sea Power in the 21st Century forum is schedule for Tuesday, July 16th at 12:00 p.m. in SR-325 the Senate Caucus Room.  Senator Susan Collins (R-ME), and Representative Peter Visclosky (D-IN), will speak on the necessary force levels and funding required to maintain American Sea Power. Lieutenant General Emil R. Bedard, Deputy Commandant for Plans, Policies, and Operations, has been invited to discuss the Navy/Marine Corps role in fighting the war against terrorism. Allan Cameron, President of Bath Iron Works, will serve as Master of Ceremonies.  A light lunch will be provided and the forum is expected to conclude no later than 1:30 p.m. The purpose of these forums is to increase awareness of the critical role of Sea Power in defending the security of America and her allies, and the increased risk to our security as a result of neglect of our Sea Power fleet. For more information call (202) 544-8170.

Navy’s Future Depends On More Ships – NOW!

An early draft Navy Program Objective Memorandum for FY2004 (POM-04) proposes $10.2 billion for purchase of 7 ships in FY04. It specifically calls for three DDG-51 destroyers, two LPD-17 amphibious ships, one Virginia class submarine, and one T-AKE cargo ship. Additionally, this early draft proposes eight new ships in FY05, seven in FY06, ten in FY07 and eleven in both FY08 and FY09.

The POM-04 also proposes to use split funding for several ships in the plan. Split funding is when a ship is paid for over two years instead of fully funded in one year. The plan calls for split funding all Virginia class submarines across the six-year plan, and includes a seven-ship multiyear procurement for the program. This proposed split-funding approach would create a $750 million offset to fund other shipbuilding programs. Additionally, the plan continues to split fund the future aircraft carrier CVN (X).

While this draft POM-04 is a major improvement over the existing POM, it will expand the current 47-ship shortfall to 53-ships by 2009.  In other words, these budgets will not stop the fleet from shrinking to a force of only 247-ships as obsolete ships are decommissioned. The Navy must increase the annual shipbuilding rate to more than 12 ships a year to begin rebuilding toward a 300-ship fleet, and to compensate for the last decade of neglect. It would take the Navy 27 years to rebuild the fleet to 300 ships if it begins to buy 12 ships a year, every year, in FY04.   The continued failure of the Navy and the Department of Defense to adequately budget the numbers of ships needed annually to meet the nation’s security requirements is placing the safety of all Americans at risk.

Vanishing U.S. Merchant Marine

The U.S. Merchant Marine is a fundamental element of America’s national security and transportation system, providing an active, fleet of American built, owned and operated ships available to support the Department of Defense in times of national emergency and war. Unfortunately, the cornerstones of this fleet have been dramatically weakened in recent years, placing the national security value of the fleet in question.

In 1980, under the Operating Differential Subsidy (ODS) Program of the Merchant Marine Act, the U.S. Merchant Marine fleet numbered 165 ships engaged in international commerce and contractually obligated to serve as the fifth arm of our armed forces in times of emergency.   This fleet was built in the United States by a shipbuilding industrial base of 22 shipyards engaged in the construction of large oceangoing ships for the Navy and/or commercial customers, employing 140,000 workers. The fleet was also owned by 26 American companies, and crewed by 13,313 American citizens. 

In 1995, the Maritime Security Program (MSP) was enacted to replace the ODS program. At that time, the US construction law of the Merchant Marine Act was repealed for MSP eligible ships, and regulations were subsequently promulgated by the Maritime Administration to relax the U.S. ownership law, as foreign companies bought all but two of the US MSP companies. Today, the fleet numbers just 45 ships owned by nine companies, 87% are foreign owned. Only one American built ship remains in the program, and the fleet’s pool of U.S. merchant mariners has shrunk to 2,689. While at the same time the shipbuilding industrial base has reduced in size to only eight shipyards, with a total workforce of 59,000. The shipbuilding supplier base has also contracted dramatically leaving only two, and in some cases just one, manufacturer in existence for critical ship components.

If major reforms are not made to the 1995 Maritime Security Program, the demise of the American Merchant Marine is inevitable, and US dependency upon foreign shipyards and foreign companies to build and operate a fleet of merchant ships to serve as a Department of Defense reserve fleet will increase. Foreign maritime dependency will increase the risk of terrorist attack, jeopardize the industrial capability of the United States to build warships for the Navy, increase the price of US warships, increase DOD transportation cost in peace time, and jeopardize transportation of DOD supplies in times of war. Theses are totally unacceptable and unaffordable security risks to the United States.

As debate begins in Congress to reauthorize the Maritime Security Program, the country needs to ensure that the program truly provides maritime security for the Nation in the face of terrorism by ensuring an American Merchant Marine – a fleet of militarily useful ships built, crewed, and owned by Americans. An extension of the MSP program as it is currently structured will not meet our national maritime security requirements of the 21st Century.

Navy Approves LPD-17 / DDG-51 Swap

The Navy announced on June 16th that it signed a Memorandum Of Understanding (MOU) with Bath Iron Works, Ingalls Shipbuilding, and Avondale to transfer ship construction between the three shipyards. The MOU outlines the terms and conditions for transferring the construction of four LPD 17-Class amphibious transport dock ships from Bath Iron Works to Ingalls and Avondale shipyards in exchange for construction of four additional DDG 51-Class destroyers at Bath Iron Works.

Speaking about the agreement, John J. Young Assistant Secretary of the Navy for Research, Development and Acquisition, said, “The Navy and the shipbuilders have taken a bold step today. This shipbuilding transfer agreement will save the taxpayers money over the life of these two programs by dramatically reducing the cost and schedule risk in the LPD 17 program. The new fiscal year 2002-2005 DDG multi-year contract pricing and conditions were also negotiated in conjunction with the swap agreement. This agreement is a win-win for both shipbuilders and the Navy.”

Under this plan, DDG 102, which was to have been built at Ingalls, will be transferred to Bath Iron Works. LPD 19, in the initial stages of construction at Bath Iron Works, will be transferred to Ingalls and Avondale.  The original shipbuilding program awarded in 1996 called for Avondale to build eight ships and Bath Iron Works to build four ships.

As a result of this agreement, the Navy is expected to realize significant net cost savings on the LPD-17 and DDG-51 programs. The arrangement is anticipated to provide for increased LPD-17 program stability and cost savings by centralizing production at one company, and improved workload stability at Bath Iron Works with additional DDG's in its new land-level facility.

Defense Provisions in the Supplemental
Appropriations Bill

On June 7th the Senate passed an amended version of H.R. 4775, The FY2002 Supplemental Appropriations Act, and on June 12th the House of Representatives appointed conferees to work out the differences between the bills of the two chambers. The Senate has yet to name conferees and a conference committee meeting has not been scheduled.

Both the Senate and House passed bills provided the $14 billion requested by the President for the Department of Defense. This request included $7.2 billion for ongoing military operational costs; $4.3 billion for personnel costs, primarily call-up of Guard and Reserve personnel; $500 million for high priority munitions, Unmanned Aerial Vehicles (UAVS), and Special Operations force equipment needs; $1.6 billion for intelligence and other classified activities; and $420 million for coalition support. The House passed version of the bill provides an additional $1.7 billion over the President’s request for DOD, most of which goes to un-funded personnel and operations costs as a result of Operation Enduring Freedom.

In May, Newport News Shipbuilding received the Gold Pretreatment Excellence Award and the Pollution Prevention Award from the Hampton Roads Sanitation District (HRSD). The Gold Award signifies a perfect compliance record for the year 2001.  The Pollution Prevention Award is presented to industries for outstanding multimedia (air, land, water) pollution prevention efforts. There is only one recipient in each category. 

Electric Boat awarded $6 Million Contract Option
for Virginia-class Submarine

On May 20, 2002 the US Navy awarded Electric Boat a $6 million contract option for advance procurement of on-board repair parts for the first four submarines of the Virginia class. The work will be shared between Electric Boat (55 percent) and Newport News (45 percent). Electric Boat and Newport News Shipbuilding are teamed to construct the Virginia-class submarine. The option is part of a $4.2 billion contract the Navy awarded Electric Boat in 1998 for the construction of the first four ships of the class.

Avondale Delivers Polar Resolution

On May 30, 2002, Avondale, New Orleans, Louisiana, delivered the second of five 140,000 deadweight ton, double-hulled crude oil carriers to Polar Tankers Inc., a wholly owned subsidiary of Phillips Petroleum. The ship is part of the Endeavor class of tankers, which are the first crude oil tankers being built for the Alaskan trade in compliance with the federal Oil Pollution Act of 1990. The ships exceed the existing and proposed environmental regulations by having an average distance of 10 feet between the hull and the storage tanks, independent engine rooms, and twin propellers and twin rudders for greater maneuverability.

Ingalls Shipbuilding Redelivers Venezuelan Naval Frigates

On May 17, 2002, Ingalls Shipbuilding redelivered the first of two modernized and upgraded Venezuelan naval frigates, the Mariscal Sucre (F-21).  The Almirante Brion (F-22) is expected to be redelivered later this summer.   The modernization project aboard the two 20-year old Italian-built frigates included repairs and upgrades to the ship’s hull, as well as the propulsion, weapons, electronics, and communications systems.