American Shipbuilding Association

Senate Defense Appropriations Bill Increases Navy Shipbuilding

Prior to adjourning for summer recess, the Senate passed HR 5010, the FY 2003 Defense Appropriations Bill.  The Senate appropriated $9.2 billion for naval shipbuilding and conversion.  This is $1 billion over the House bill.  The Senate Appropriations Committee added $229 million for CVN (X), restoring the aircraft carrier construction schedule to 2006.  Most of the increases were to shipbuilding prior year bills.  The Committee added prior year funding of $337 million for the LPD-17 program, $287 million for the DDG-51 program, and $213.1 million for the SSN-774 class of submarines. The Senate also restored full funding for the DD(X), the surface combatant for the 21st Century, and added $30 million above the Administration’s request to accelerate research and development of the Littoral Combat Ship, LCS(X).  Though the Senate bill still falls short of what is needed to start rebuilding our naval fleet, it has set the stage for forward thinking in regards to the need for new ship construction. 

Senator Trent Lott (R-MS) commented that the Senate bill makes sense for shipbuilders, the Navy, and the United States.  Speaking in support of the Senate increase, Sen. Lott  acknowledged that the recommendations of the Committee filled a hole in the defense budget pertaining to the lack of ship construction.  According to Sen. Lott, “Ships play a central role in our ability to project power…it looked like we, as a nation, were close to losing a key pillar in our fight against global terrorism… This spending profile not only threatened the capability of our Navy, but also threatened to severely dismantle our capability to produce ships in the United States.” 

The Senate has appointed conferees to work out the differences with the House.   The Defense Appropriations bill will be taken up in conference committee once Congress reconvenes in September.

A Bipartisan Failure – the Decline of America’s Naval Fleet

Speaking at the American Sea Power in the 21st Century Forum on July 16th, Senator Susan Collins (R-ME) and Congressman Peter Visclosky (D-IN) addressed the serious problems facing America’s naval fleet, and called on the Administration to take a leadership role in rebuilding the shrinking naval fleet and aging force.  Lieutenant General Emil Bedard, Deputy Commandant for Plans, Policies and Operations for the Marine Corps, spoke on the success of the Navy and Marine Corps sea based operations in the war in Afghanistan, and expressed the services need for recapitalization of aging assets.  

Sen. Collins outlined the dangerous condition of America’s Sea Power fleet, stating “We have been consistently under-funding naval shipbuilding.  The FY 2003 budget provides $48 billion in overall defense increases, yet the Navy’s budget provides fewer ships than last year… If we are not committed to reversing the decline in the naval shipbuilding  rate this year, then when will we?”  Sen. Collins urged the President to address the disparity between naval fleet requirements and the budget. 

Rep. Visclosky reinforced this sentiment.  According to the Congressman, “There is no question that we need to build more ships.  But the way things have been going year in and year out, under Democratic and Republican Administrations, this is a bipartisan failure.”

Rep. Visclosky stated that, “The Administration is going to have to ask for more money because it is very difficult, despite the huge proportional add-on for the Department of Defense, to do what clearly needs to be done… this problem should be solved, and it should be solved sooner rather than later.”

House Merchant Marine Panel Continues Hearings on MSP 

Richard Vortmann, President of National Steel and Shipbuilding Company (NASSCO), and Chairman of the Board of the American Shipbuilding Association, testified before the House Armed Services Committee Merchant Marine Panel on July 23rd about putting   “security” back into the maritime program know as the Marine Security Program (MSP). 

MSP is one of the main sources of sealift to carry military supplies and cargo to support the nation’s forward deployed armed forces.  Under MSP, the Government contracts with U.S. operators of commercial ships for service when needed for national emergencies or war.  These ships carry cargo such as military equipment, spare parts and food when needed to sustain the deployment of American armed forces. 

In his testimony, Mr. Vortmann emphasized that America’s merchant marine and supporting maritime industries are dying.  According to Mr. Vortmann, simply extending the MSP will “neither save nor foster an American merchant marine to meet our nation’s sovereign military requirements in time of war and national emergency.”  He went on to state that reauthorization of the existing MSP program will not provide the Department of Defense (DoD) with the types of ships it needs and will leave DoD at the mercy of foreign governments for sealift ship construction and ship operation.      

Mr. Vortmann recommended that in order to address the deficiency in MSP, the DoD pay for the design and construction of ships over a multi-year construction period and then lease the vessels to American ship operating companies at international bareboat charter rates for use in commercial trades.  The DoD would own the ships, ensuring military utility and availability.  This program would strengthen the U.S. defense shipbuilding and repair industrial base, and create thousands of long term jobs for both commercial and naval craftsmen.  According to Mr. Vortmann, this plan would be a “win-win for commercial U.S. ship operators, DoD, U.S. crews, and U.S. shipbuilders.”

Chairman of the Special Oversight Panel, Rep. Duncan Hunter (R-CA), and other members of the panel all expressed strong support for rebuilding America’s merchang marine and the need to ensure that our sovereign national interest could be met by having a fleet of ships built, owned, crewed, and operated by Americans.  

House Bill Seeks to Affirm the Congress’s Commitment to Rebuild Naval Forces

On July 23, 2002, Representatives Jo Ann Davis (R-VA) and Representative Gene Taylor (D-MS) introduced HR 5196, The National Naval Force Structure Policy Act.  The bill makes it the policy of the United States, “to rebuild as soon as possible the size of the fleet of the United States Navy to no fewer than 375 vessels in active service, to include 15 aircraft carrier battle groups and 15 amphibious ready groups, in order to ensure peace through strength for the United States throughout the 21st century.”

For several years, the regional naval commanders-in-chief (CINCs) have testified before Congress that America’s fleet must be increased to 375 ships for our own domestic security and the protection of our values and interests overseas.  The CINCs have repeatedly warned that the existing fleet of 314 ships is stretched perilously thin in responding to wars around the globe; that maintenance costs are out of control due to the high operations tempo; training time for Sailors and Marines is suffering; and that shore-side leave between deployments is being cut short.   All of these are symptoms of a fleet that is too small to meet its missions. 

This legislation is essential to underscore the naval force structure requirement that has been ignored for the last decade.  The American Shipbuilding Association applauds Representatives Davis and Taylor for their leadership and urges other Members of Congress to co-sponsor this important bill.  

Transportation Appropriations Bill Cuts Funding for USCG Deepwater Program

On July 25th, the Senate Appropriations Committee approved recommendations for FY 2003 transportation funds.  The Senate report recommended $480 million for the Coast Guard Integrated Deepwater System (IDS) Program.   This is $20 million less than the Administration’s budget request.  Included in the IDS decrease was a $3 million cut for the National Security Cutter, bringing the total recommendation to $213 million for surface vessels. 

Many of the Coast Guard’s critical missions, including counter-terrorism activities, rescuing mariners, and catching drug smugglers, require forces that are able to operate effectively.  The Coast Guard’s Deepwater cutters are designed to operate in the demanding ocean environment, but existing cutters are aging.  IDS is designed to replace and modernize Coast Guard cutters.  This Program is critical to the Coast Guard’s future and its ability to protect the United States. 

Supplemental Appropriations Bill Cuts Title XI

On August 2nd, President Bush signed into law the Supplemental Appropriations bill for FY 2002.  House and Senate conferees rescinded $5 million from the $33 million originally appropriated for the Title XI Ship Loan Guarantee Program.  This decrease was completely unexpected in that neither the House nor Senate bills for supplemental appropriations decreased monies earmarked for Title XI. 

The Ship Loan Guarantee Program (Title XI) guarantees commercial loans of ship owners for construction of vessels in U.S. shipyards.  It is not certain at this time how the decrease in the Supplemental will impact funding for FY 2003.  The Senate Appropriations Commerce, Justice, and State Subcommittee recommended $37 million for Title XI in FY 2003.  This was the amount awarded last year, and is $33 million above the Administration’s budget request.   The Subcommittee expressed concern that the Administration did not request funds for Title XI in FY 2003, noting that projects currently under construction, as well as future projects may be in jeopardy. 

The House Appropriations Committee has not yet marked its bill.